FAANG + MSFT and TSLA Update
Previous 11/16/20 blog entitled "FAANG + MSFT Review" a technical review of the six big tech stocks showed mixed signals. The question that begs to answer was – are the rally in the big tech stocks over, or is this a pause that refreshes?
Back then, GOOGL was the only technically strong name within the big 6 Technology stocks as it recorded new all-time highs. AAPL, FB, MSFT, and AMZN were all confined to neutral sideways trading patterns. NFLX was technically weak and vulnerable to further selling.
FAANG remains the popular acronym comprising of the five individual companies – Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX), and Google - now Alphabet (GOOGL). Along with Microsoft (MSFT), they continue to be the technology giants of the financial markets. The 11/16/20 Blog showed the market capitalization of the big tech stocks ranked by high to low. AAPL ($2.05 trillion), MSFT ($1.64 Trillion), AMZN ($1.57 trillion), GOOG ($1.20 trillion), FB ($794.48 billion), and NFLX ($211.66 billion).
Today, 1/20/21, the market capitalizations are AAPL ($2.221 trillion), MSFT (1.696 trillion), AMZN ($1.638 trillion), GOOG ($1.276 trillion), FB ($761.783 billion), and NFLX ($259.162 billion). For the most part, the big tech stocks are the same as before. One important point to mention, TSLA (806.227 billion) is now part of the S&P 500 Index. This Consumer Discretionary name is the fifth-largest market-cap-weighted name in the SPX Index. Perhaps it needs to be added to the FAANG + MSFT list.
So, what has happened to FAANG + MSFT and TSLA over the past two months?
Two months later, technical signs have developed to suggest the bull rally in the big tech stocks may not be over. The recent trading ranges in recent months seem to be high-level consolidations. The backing-and-filling process may be alleviating the overbought technical conditions. The technical breakouts today and any future breakouts in the future may set the stage for the resumption of their respective structural bull trends.
Enclosed below are the technical reviews for the seven technology titans.
Apple, Inc. (AAPL – 132.03)
AAPL continues with its 5-plus month consolidation, as evidenced by its bullish ascending triangle pattern. The recent successful test of the initial support at 125-126 (Nov 2020 uptrend, 12/15/20 breakout, Jan 2020 lows, and 50-day ma) hints of a rally toward pivotal resistance near 137.74-138.79 (Sep/Dec 2020 highs). A convincing breakout suggests the next sustainable rally toward 143-145 (near-term), 148-151 (intermediate-term), and then 173-175 (longer-term). On the downside, violation of 125-126 warns of a correction to 112.5-115 (11/24/20 low and Sep/Nov 2020 uptrend and bottom of triangle), and then to 103-107 (Sep/Nov 2020 lows and the 200-day ma).
Microsoft Corp. (MSFT – 224.34)
For the past 4-months, MSFT has been consolidating via a symmetrical triangle pattern between 203-206 and 226-227.5. On a shorter-term basis, a trading range has also developed in the past two months between 208-212 (Nov 2020 and Jan 2021 lows) and 226-227.5 (top of the triangle and Nov/Dec 2020 highs). A convincing move above 227.5 confirms the two technical base breakouts and suggest MSFT targets to 232.25 (9/2/20 all-time high, near-term), and above this to 246-247 (intermediate-term), and then to 263-265 (longer-term). Initial support moves up to 216.5-217 (1/20/21 gap-up and 50-day ma), and below this to 208-212 (Nov 2020 lows and the bottom of the Sep 2020 triangle), and then to 199-203 (Oct 2020 low and 200-day ma).
Amazon.com, Inc. (AMZN – 3,263.38)
Since trading to its all-time high of 3,552.25 (9/2/21), AMZN has been confined to a well-defined trading range via a triangle pattern between 3,073-3,086 (Dec 2020/Jan 2021 lows) and 3,351-3,367 (Jul/Nov/Dec 2020 highs and top of Sep 2020 triangle). On a shorter-term basis, a smaller trading range is also visible between 3,073-3,086 (Dec 2020/Jan 2020 lows) and 3,249-3,263.5 (12/1 and 12/7/20 highs). A surge above 3,263.5, specifically above 3,351-3,367 confirms a breakout and suggests a rally to 3,496-3,552 (Sep/Oct 2020 highs, near-term), and above this to 4,032-4,048/4,234 (intermediate-term). Initial support rises to 3,145-3,175 (1/20/21 gap-up and the 50-day ma), and below this to 3,073-3,086 (bottom of the triangle pattern and the Dec 2020/Jan 2021 lows), and then 2,950-2,952 (Nov 2020 low and 200-day ma).
Alphabet Inc. (GOOG – 1,886.90)
GOOG has recorded another new all-time high of 1,903.71 (1/20/21) via a gap-up breakout above the prior 12/3/20 high of 1,847.29. The next key challenge is to surge above the top of its Feb/Mar 2020 rising wedge pattern near 1,905. A breakout here renders the next GOOG target to 1,995-2,000 (near-term), and then to 2,050-2,060 (intermediate-term). Initial support is 1,809-1,825.5 (1/20/20 gap-up), and below this to 1,768 (50-day ma), 1,699-1,721.5 (Dec 2020 and Jan 2021 lows), and then 1,514.5-1,543 (200-day ma and 10/28/20 low).
Facebook, Inc. (FB – 267.48)
The V-pattern breakout above 224.20 in May 2020 suggests 87.10-points or an FB target of 311. FB traded to an all-time high of 304.67 (8/26/20) before an overbought condition led to the recent 5-month consolidation between 244-249 (Sep 2020/Jan 2021 low and 200-day ma) and 292-297.5 (Nov and Dec 2020 highs and the top of the trading range). On a near-term basis, the 50-day ma at 272.5 provides key near-term resistance. A convincing move above 272.5-280.5 can lead to a key test of resistance at 292-297. A confirmed breakout above 297-304.67 signals the next FB rally toward 350-353 (medium-term) and then to 365-370 (intermediate-term). The key support remains at 244-249 and a violation here warns of a correction to 224 (V-pattern breakout), and below this to 201-207 (May/Jun 2020 lows).
Netflix, Inc. (NFLX – 586.34)
NFLX was the first FAANG stock to have peaked during Jul 2020 at an all-time high of 575.37. Since then, it has been consolidating between 458.5-463.5 (Sep/Nov 2020 lows) and 572.5-573.5 (Jul/Oct 2020 highs). The gap-up breakout above 575.5 on 1/20/21 hints of a significant technical base. The breakout suggests 116.77 points or an NFLX target to 689-692, intermediate-term. Initial support rises to 570-575 (the extension of the base breakout), and below this to 545.5-557 (top of 1/20/21 gap-up and Dec 2020 highs), 505.5-509 (bottom of 1/20/21 gap-up and 50-day ma), 481-485.5 (Jan 2021 lows and 200-day ma), and then 458.5-463.5 (Sep/Nov 2020 lows).
Tesla Inc. (TSLA – 850.45)
TSLA continues to trend higher to new all-time highs. Although an overbought condition has developed in 1/8/21 as evidenced by the RSI peaking near the mid-80s, it is still possible for a strong technical stock to remain overbought for an extended period before finally correcting. The sharp rally over the past month has created another flag/pennant pattern. A convincing move above 884.49 completes a near-term consolidation and suggests 270.36-points or a TSLA target of 959-1,000 (near-term) and above this to 1,155 (intermediate-term). Trading support rises to 803.5-819 (bottom of the flag/pennant), and below this to 695 (12/18/20 high), and then 630 (50-day ma).