Apple, Facebook Shares Look To Be Prepping For Earnings Next Week

Apple Inc AAPL and Facebook Inc FB started the month of April with big bullish moves that helped revive the Nasdaq 100 and push the S&P 500 to new highs.

Both big tech stocks have now fallen into consolidation patterns ahead of the release of earnings reports scheduled for April 28.

If Apple and Facebook impress investors, each stock is set up for new all-time highs on the charts.

The Apple Chart: Apple broke through the neckline of a bullish inverted-head and shoulder pattern on April 5 and over the following seven trading days completed a 9% measured move north. It has since begun sideways consolidation just above the gap left on Feb. 17 and above support at $132.63. A new gap was left behind, however, on the April run at the $128 mark.

On Wednesday morning Apple’s stocks opened below resistance at $132.63 and dropped below the eight-day exponential moving average. The stock is still trading well above the 21-day EMA, and the eight-day EMA is still above the 21-day EMA, which indicates there is still room for healthy consolidation.

Bulls want to see continued consolidation into next week. Ideally Apple’s stock will fill the gap during consolidation and hold support at $127.28.

If Apple stock can stay above that support level, a positive earnings reaction could see the stock bust back up through the $132 resistance level and make a run toward all-time highs.

Bears want to see Apple’s stock continue to trend down, and for an earnings miss, for it to drop it below support near the $127 level. If that support level is lost, there is room for the stock to fall to $123.03 before finding another support level.

Facebook’s stock is trading between the eight-day and 21-day EMAs, with the eight-day EMA being above and the 21-day EMA below its share price.

This shows indecision or consolidation. A bullish break of the falling wedge will pop Facebook’s stock back above the eight-day EMA easily.

Bulls want to see bull volume come into Facebook’s stock to break it up out of the falling wedge.

Although the apex of the falling wedge is on May 5, it is likely that the run-up into earnings or the earnings report itself will be what breaks the pattern. If Facebook’s stock can break over resistance at $304.67, it can make a run back for all-time highs.

Bears want to see Facebook’s stock continue to trend down within the falling wedge. If the stock loses support at $297.38, it could fall to $286.55.

A negative reaction to Facebook’s earnings could then drop the stock under support at the $286 mark, which would give it room to fall down toward $277.