Stock prices are forward looking. That means their current prices anticipate future earnings and events. So even if the worst is not over yet for tech earnings, tech stocks may start anticipating a turnaround. Though there is no way of knowing when that will happen, there are some ways of making informed guesses.
X
Support levels are prices where stocks get a lot of buyers’ interest. It is one way of figuring out the beginning of an upward trend. Stocks tend to bounce from those levels at least a few times. It’s also important to watch levels where a stock finds it difficult to move further up. These resistance levels are hurdles to cross and may lead to a fresh falloff.
Are Tech Stocks A Buy Already?
So after the tech carnage last week, is it time to buy beaten-down tech stocks again?Â
Google parent Alphabet (GOOGL) missed both revenue and earnings on poor ad revenue last Wednesday. Microsoft (MSFT) beat sales and earnings views but also showed lower net income. Amazon.com (AMZN) had lower operating and net income as well as decreases in cash flow. Intel (INTC) came in with earnings and sales above views but offered a soft outlook. And Apple (AAPL) beat views on strong MacBook sales, though it gave a cautious outlook.
With the outlook for big techs looking dim, most tech stocks are trading below or testing their 50-day moving averages. They may move up to build bases with attractive buy points.
According to the CAN SLIM stock investing strategy, the best gains are made when stocks break out of sound price bases in strong volume, and when the stock market is trending higher.
Here are the key support and resistance levels to watch for as tech stocks price in future earnings and events. Keep in mind these are not buy areas, because most of the big techs have not even begun to recover from their downtrends.
Alphabet gapped down over 9% on strong volume below the psychological level of 100 Wednesday. But watch for the 95 level, where shares found support on Sept. 30 and again on Oct. 13 before falling to the level again last week.
Before the recent price action, the last time the tech stock found support at this level was all the way back in February 2021. Â
That means that the stock has found solid interest at the level it is trading now. For now, it faces resistance around 100, which also coincides with the 10-day moving average. If shares should clear those levels they have another key level at 105, which took the stock to short-term moves to 120 or above four times since May. If the stock falls below the current level, the next support may be as low as 75. So far, there’s no sign of a base forming.
Apple’s Chart Looks Better
Apple spiked to its 200-day moving average after Thursday’s earnings showed the company is withstanding the tech meltdown for now. Shares bounced off from October lows of 134. Earlier, in May and June, a support level around 130 gave rise to a larger rally.
If the tech stock does not sustain the rally, watch for the next support at 120 — a level the shares bounced off in March 2021. However, should it sustain itself, there is potential resistance in the 175 area. A possible valid entry may appear around that level in what would be a cup base.
Microsoft fell through support at 245 in September and has been trending below that level. The next floor below could be around 215, where the stock found support in December 2020. This is another tech stock far from any proper base.
Intel faces resistance along its 50-day line, as it has multiple times this year. If a rally takes shares to around 35, that’s where the stock found support in June 2017. The current price in the 25 range proved to be a support level all the way back in 2015.
Arista Networks (ANET), an IBD 50 stock, spiked last week and is forming a base with a buy point of 132.97. A large part of the base has formed under the stock’s 50-day line. But that is not unusual for a bear market. Third-quarter earnings are due after market close today. It is one of the better charts among techs.
Nvidia (NVDA) may find an aggressive entry at 192.84, though it remains well below that level as it tries to hold above its 50-day line. Earnings are due on Nov. 16.
Amazon is not strictly a tech stock. It is part of IBD’s retail sector. But its cloud services makes the behemoth largely a tech play. The stock plunged to a support level of 101 last week after dismal earnings. It has traded thrice at this level this year before advancing to 146 in August. Shares seem to have trouble clearing the 200-day line. Amazon is another tech stock a long ways from a proper buy point.
YOU MIGHT ALSO LIKE:
Want To Get Quick Profits And Avoid Big Losses? Try SwingTrader
Best Growth Stocks To Buy And Watch
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
