Wednesday, May 14, 2014
Even the most bearish element in this picture, the QQQ (bottom chart) is starting to show a little sign of life by taking a peek above its own 50 day moving average. The danger here is that a break in the general market will take the Q's below the neckline of the clearly defined head and shoulders top you can see on the chart. Such a drop would also take this index below its 200 day moving average (red line). If this should happen I would think the odds would favor the start of a bear market which would drop all the averages at least 20% from their highs and maybe more.
Of the five widely followed stocks whose charts appear at the top of this post only Twitter can be said to be in a definite bearish trend. TWTR dropped briefly below 30 which was my downside target. Nonetheless even a 12 point rally which would match the size of the biggest rally on the way down from its high would bring TWTR only up to its decline 50 day moving average. I think TWTR will drop to its IPO price of 26 and probably to 20 or so before its bear market is complete.
Google has declined to its rising 200 day moving average. I have no reason for thinking the bull market in GOOGL is over. Resistance above the market is at 538 and again at 550 - a rally to 550 would match the size of the biggest rally on the way down. A move above 550 would probably mean the GOOGL is headed back above 600.
Apple hit 705 in 2012 and subsequently lost nearly half its value by dropping to 385. Since that low AAPL has steadily climbed higher and currently is trading above rising 50 and 200 day moving averages. There have been breaks on the way up from 385 of 75 and 50 points. A 50 point drop from the recent 604 high would bring AAPL down to support at two recent highs (green line) and just below its 50 day average. A bigger break than that would probably mean that AAPL is headed below its 200 day moving average and down to 385 again.
Facebook is holding above its 200 day moving average and is at support defined by the last significant top on the way up at 55. I don't think FB will spend much if any time below 55 before moving up to 90 or so.
Visa has had the biggest break of its bull market, a break nearly twice the size of the biggest preceding reaction. Even so V did not spend much time below its 200 day moving average and held support at an old top at 195. I expect V to climb back above its 50 day average and continue up to my current upside target of 250.