Earnings season, more doubts emerge
Apple, Amazon Rallied Ahead Of Earnings
Let's take a look at Apple, Inc. stock (AAPL) daily chart (chart courtesy of http://stockcharts.com). It broke above the resistance level of $175 on Monday, and it accelerated higher on Tuesday. Just like we wrote in our previous alerts; "If the market breaks higher, it could retrace more of March sell-off and get close to record high again", the stock got closer to its record high. There is a potential level of resistance at $180-$183.5. Apple will release its earnings report on May 1 and we may see some kind of "buy the rumor, sell the news" action. However, there are still medium-term negative technical divergences:
Now let's take a look at Amazon.com, Inc. stock (AMZN) daily chart. It was relatively strong recently, following breakout above its short-term consolidation. The stock continued above the price of $1,500. Will it reach its March record high again? Amazon will release its earnings report on April 26, and just like in case of Apple, we may see "buy the rumor, sell the news" action. Potential level of resistance is now at around $1,550:
Dow Jones Above Downward Trend Line
The Dow Jones Industrial Average broke above its medium-term downward trend line, and it got closer to 25,000 mark again. On Tuesday we wrote that it was a possible short-term scenario. And it came true. What's next? We may see some uncertainty closer to the above-mentioned 25,000 resistance level. On the other hand, support level is now at around 24,500, marked by the trend line:
The early March rally failed to continue following monetary policy tightening, trade war fears, among others. What was just profit-taking action, quickly became a meaningful downtrend. Breakdown below over-month-long rising wedge pattern made medium-term bearish case more likely, and after some quick consolidation, the index accelerated towards its early February low. Just like we wrote in our several Stocks Trading Alerts, the early February sell-off set the negative tone for weeks or months to come. However, recent fluctuations were a bottoming pattern before upward reversal. It looks like Monday's breakout confirmed change of trend. At least from a short-term perspective.
Concluding, the S&P 500 index will likely extend its short-term fluctuations today. Investors may continue taking profits following recent rally. The market will probably fluctuate along the level of 2,700. Quarterly corporate earnings releases outweigh trade war fears, Syrian conflict escalation worries at this moment.