Are Technology Stocks Bottoming?
Chris Vermeulen | Sep 18, 2018 02:26PM ET
Recent downside pricing pressure on technology and FANG stocks have kept investors wary of jumping back into the market while we wait to see where the bottom will form. Concerns about long-term pricing pressures, US trade wars and the continued Congressional testimony regarding privacy and censorship issues have kept social media stocks in a negative perspective. The only aspect of this pricing pullback that is positive is that these stocks will, at some point, find a price bottom and attempt to rally as investors rush back into their favorites attempting to ride the run higher.
Our researchers believe the current price levels could be a prime example of a short-term bottom setting up in certain technology stocks. Both Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN) are two of the biggest and most actively traded stocks in the U.S. They differ from many of the other FANG stocks because these companies actually produce and sell consumer products and services that are, in many ways, essential to conducting commerce and trade.
This 30-minute chart of Apple shows our Adaptive Dynamic Learning Cycles price modeling system showing a cycle-low is setting up over the next day or two followed by an upside price cycle that should push prices back above $220. Notice the oversold levels highlighted in BRIGHT GREEN. The last major oversold levels setup just below $218. The current oversold levels are setting up just below $217. We believe that $217 will likely set up a price bottom and prompt an upside price rally over the next 5+ days that could push Apple prices well above $225.
Amazon is setting up a different type of price formation – a Fibonacci price retracement bottom. We use these Fibonacci price retracement levels in conjunction with our other price modeling systems to attempt to determine where and when price reversals may be set up in the future. In this example, we can see a price bottom formed in early August off a Fibonacci 50% price pullback and the current price pullback is testing the same 50% level. We believe this current setup will prompt a price bottom to form and an upside price rally will likely result in AMZN rushing back above $2000 again with a few days.
These types of price patterns show the characteristics of stock price action. Each stock inherently exhibits unique pricing trends and characteristics. Very few are identical in price structure/setup. Although, sometimes certain sectors move in unison.
Our predictive price modeling and cycling systems help us to identify the core price function behind the price action. We use these advanced predictive tools to help us understand what is the most likely future outcome of certain stocks and when we see opportunities, we try to alert our followers and members. Our most recent pick was IYT and we've been riding that trend for over 5 weeks now.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.