The opening of antitrust investigations by U.S. authorities into select tech stocks aren’t going to reach any verdicts anytime soon. In today’s market though, the price charts of Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) are showing signs of acquittals for some bulls and imprisonment for others.
Finally, trade wars with China and Mexico took a back seat this week for four of the country’s largest tech stocks. But Monday’s surprise wake-up call that the Federal Trade Commission and Justice Department are readying to investigate AAPL, AMZN, GOOGL and FB was anything but a reprieve. Shares collectively hit fresh relative lows and losses ranged from about 1% to 7.5%, respectively.
In a nutshell, authorities are looking at each company’s unique, but dominant digital platforms, which have hindered competition for consumers and determined whether any punitive measures or even the breaking up of these companies is required. It sounds grim to say the least, but is it really?
Despite the immediate bearish judgment from Wall Street, any future verdicts, good or bad, will also take a lot of time to render. Everything else is 100% pure conjecture. In the interim and in the here and now, it’s simply business as usual on the price charts of these tech stocks and where verdicts are being handed out in favor of both bulls and bears in today’s market.
On the antitrust news, AAPL stock demonstrated the most resiliency with its relatively modest loss of around 1% and holding the 62% retracement level. Shares have also continued to show strength this week in rallying strongly to their highest prices in three weeks. Our verdict however on this tech stock is bearish.
Apple was one of the weaker tech stocks in the group prior to the antitrust news. Now and with shares in-between resistance from the 200-day simple moving average and 50% retracement level and stochastics overbought, the interpretation is this week’s price action may be little more than a bear market rally.
Sentencing: Short AAPL stock if zone resistance is confirmed by a bearish daily chart reversal pattern next week.
Technically, after holding the larger corrective base’s 50% retracement level, AMZN shares are now firmly above the 200SMA and sporting a more supportive stochastics set-up, I’d be a cautious buyer in this name.
Sentencing: Buy AMZN stock on a pullback towards 200SMA support with a stop-loss below $1,738.
GOOGL stock has been both the strongest and weakest name since December 2018’s broad-based market bottom. After making a marginally new all-time-high at the end of April, shares are the closest of our four stocks to its prior lows. Similarly, they’re also setting up nicely as a contrarian-based buy.
Sentencing: I’m a buyer of this tech stock’s exhaustion gap and island-style price pattern, which is reinforced by positive divergence in GOOGL’s stochastics. Shares look ready for purchase today with a stop-loss beneath the pattern bottom.
Technically, I like that FB stock held the 200SMA and 50% level at this week’s low. And stochastics are looking mostly supportive of the bull case.
Off the price chart, I can’t help but think of the four names targeted by authorities, Facebook is also the weakest or least likely for any charges to stick. What are they going to charge the company with? Too many people sharing stories and pictures on Facebook and Instagram?
Sentencing: Buy this tech stock if FB shares can confirm a weekly chart hammer candlestick next week by trading above the pattern high. Set a stop-loss beneath the pattern bottom.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
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