Chart Wars: Between Apple And Google, Which Stock Can Bounce Higher?

Apple Inc AAPL and Alphabet Inc GOOG GOOGL were trading flat early Tuesday morning, following a volatile day on Monday when each stock fell slightly lower before closing the trading day flat.

The tech giants have been trading in downtrends since April 4, when the S&P 500 confirmed a new downtrend by printing a lower high, which set the fund into a 4.63% decline from the closing price on that date to a low of $4,370.30 on Monday.

Apple and Google both look set for a bounce, at least to print a consecutive lower high on the daily chart because on Monday the stocks printed reversal candlesticks, with Apple forming an inverted hammer candlestick and Google creating a hammer candlestick.

It should be noted, however, that events affecting the general markets, negative or positive reactions to earnings prints and news headlines can quickly invalidate patterns and breakouts. As the saying goes, "the trend is your friend until it isn't" and any trader in a position should have a clear stop set in place and manage their risk versus reward.

In The News: Apple and Google are set to print their first-quarter earnings on April 28 and April 26, respectively. When Apple printed a fourth-quarter earnings beat on Jan. 27, the stock shot up 8.5% over the five trading days that followed. The iPhone maker reported earnings per share of $2.10 on revenues of $83.4 billion, exceeding the consensus estimate of $1.89 per share.

The day following Google’s blow out fourth-quarter earnings report on Feb. 1, the stock soared 10.3% to reach a new all-time high of $3,042. Google reported earnings of $30.69 per share on revenues of $75.3 billion, which beat the Street estimate of $27.48 per share. Google also announced a 20-1 stock split, scheduled to take place on July 18.

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The Apple Chart: Apple’s most recent lower high in its downtrend was printed on April 14 at $171.27 and the most recent confirmed lower low was printed at the $165.50 mark on April 11. If the stock bounces up on Tuesday, Monday’s low-of-day will act as the next lower low within the pattern.

• Apple’s downtrend is taking place within a falling channel, which is considered to be a bearish pattern until a stock breaks up from the upper descending trendline on higher-than-average volume, which can indicate a strong reversal to the upside is in the cards. If the stock breaks up from the pattern, it will also regain support at the eight-day and 21-day exponential moving averages (EMAs), which would give bullish traders more confidence going forward.
• Apple is currently trading below the 50-day simple moving average (SMA), but above the 200-day SMA, which indicates there is indecision in long-term sentiment. Bullish traders will want to see the stock regain support at the 50-day SMA in short order.
• Bearish traders can watch for Apple to reject the upper trendline of the falling channel, which could indicate the stock will fall down to test the lower trendline of the pattern as support.
• Apple has resistance above at $167.88 and $171.03 and support below at $162.14 and $157.26.

The Google (GOOG) Chart: Google’s most recent lower high was printed on April 14 at $2,614.21 and the most recent confirmed lower low was printed at the $2551.52 level on April 12. Like Apple, Google’s downtrend is taking place within a falling channel and a break from the upper trendline on higher-than-average volume would be bullish.

• Google is trading below the 50-day and 200-day SMAs, and on March 4 the 50-day crossed below the 200-day, which caused a death cross to form. Both SMA’s will now act as heavy resistance on a potential move upwards but the stock can run 5% higher before running into the 50-day SMA.
• In addition to printing a hammer candlestick on Monday, Google’s relative strength index (RSI) is measuring in at about 37%, which indicates a bounce may be on the horizon. When Google’s RSI fell to the same level on March 7, the stock bounced up 5.85% over the two trading days that followed.
• Google has resistance above at $2,601.84 and $2,659.82 and support below at $2,528.20 and $2,440.

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