Apple Of My Eye:
As AAPL and MSFT flip flop between the largest trillion dollar market capitalizations, both names have had a great effect in the markets resiliency this year. On AAPL’s WEEKLY chart it has acted well POST breakout from a one year long cup base pivot of 233.57, the week ending 10/11 in a pattern that began the week ending 10/5/18. Below on its daily chart I would not be surprised to see that breakout retested as it trades well above its rising 50 day SMA, and has recorded two bearish candlesticks this week near at all time highs. Today’s hanging man, after its FOURTH straight positive earnings reaction, and the engulfing candle suggest at least a pause in the prevailing trend. That could mean a visit back to 50 day SMA, which happened in May and July this year (the latter held, while the former did not receive support there). If that were to occur, treat it as an opportunity.
The semiconductors continue to do the vast majority of the heavy lifting within technology these days. The SMH is higher by 46% YTD, nearly double the 2019 gain so far from the IGV which has risen a respectable 24%. The semis carry a nice advantage with yield too, as the SMH sports a dividend yield of 1.3% compared to the IGV’s .1% (perhaps that is a function of investors striving for some sort of yield). The space continues to show divergence regarding recent earnings reports. We all know the disparity between some behemoths with INTC jumping, and TXN slumping. But in showing that leaders shine, results from names in firm uptrends this week witnessed CRUS and IPHI jumping 16.2 and 19.4% respectively. And laggards that saw softness include MXL and CREE which fell 15.8 on 10/25, and CREE falling marginally today but give extra credit for a nearly 20% move off intraday lows Friday.
Pay special attention to names that act well on a poor tape. Below is a prime example of that, with the stock of PSTG and how the computer hardware play was written in our 10/29 Technology Note. It currently trades 17% off most recent 52 weeks, but the name is higher 16 of the last 17 sessions, and the chart trades very taut, hallmark bullish traits. It has acted well since completing a bullish island reversal this August, and has is now approaching the very round 20 number. That would be an upside gap fill from the 5/21 session, and it has been digesting big winning streaks recently (its up the last 3 weeks by 17% and this week is flat, and it jumped 30% during a 4 week winning streak the weeks ending between 8/23-913 as well). On the WEEKLY chart if the stock can keep gaining momentum a double bottom base is setting up with a potential pivot of 23.63.