Charts See Possible Value in Apple, Facebook

 | May 08, 2016 | 10:30 PM EDT
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First of all, if you want an update in the SPX, please watch the free video update that I posted on Twitter Friday. That will get you up to speed there.

Basically, the low made in Friday's session is key and pivotal as it was made at time and price for a low. At this point, the S&P is still vulnerable to the downside, but if it can clear some important hurdles discussed on this video, I'm going to consider that Friday's low is more important.

Let's look at a few stocks I haven't updated in a while, starting with Facebook (FB). At this point in time, I'm still looking for higher prices in this one with my next immediate upside target coming in at the $122.14-$123.85 area. A secondary target comes in at the $130.43 area.

What supports a bullish scenario in this one is the fact that price is clearly above the 200-day and 50-day simple moving averages and the May 13 exponential moving average (EMA) combo is in a buy mode with the 5 above the 13 EMA. The pattern of higher highs and lows is also bullish. I do have some timing cycles coming due May 12-13. With those cycles in mind, if you get a spike up into any of these targets I would suggest that you ratchet up trailing stops at that point since timing is potential resistance to the current rally. For those who are shorter-term oriented I would suggest having a stop below $115.84, which is where the last short-term buy entry unfolded. If this stock is truly going to stay in a strong position, ideally I don't want to see it much below the $111 area.  


Facebook (FB) -- Daily
Source: Dynamic Trader



Facebook (FB) -- 30-Minute
Source: Dynamic Trader


I'm also looking at a setup in Amgen (AMGN). With the current pattern on this stock since the May low was made I'm stalking this one for the possible resumption of the rally on a pullback to this low. I am seeing some Fibonacci timing cycles that are suggesting a possible low between now and May 13, as illustrated by the cycles below the chart. I am also seeing a pullback into a clustering of Fibonacci price relationships. The two zones that stand out on this chart come in at the $150.63-$151.36 area and then the $148.83-$149.46 area. One support decision that comes in on the outside of those two areas is $146.74.

At the most recent low, that has been made in this stock note that the decline is $13.34 so far. This is exactly equal to the prior larger decline of $13.34 into the March 10 low. Over the years, I have found that many swings in a particular stock will be similar to others. That's why I pay attention to these symmetrical projections very closely. Bottom line, I am watching for a buy trigger in this one via a 30-minute chart. I want to see the 8 EMA cross back above the 34 EMA along with a pattern shift (taking out a prior swing high in this case would be a pattern shift). If I see this I will be a buyer ideally on a pullback and define my risk either below the low made prior to the buy trigger or below the price cluster of support on which the decision is based. The setup is a bust if all the defined support is violated instead. If the trade does start to play out, the potential upside target No. 1 comes in at the $168 handle. 


Amgen (AMGN)
Source: Dynamic Trader


One more stock I will comment on is Apple (AAPL). This stock is simply disappointing lately. After a buy signal that fired off after the January timing cycles were tested and held, this one has failed miserably. If you looked at the 8/34 EMA combo after the January low was made, you will see where the crossover of the 8 above the 34 triggered a buy entry on a 30-minute chart, but after the recent highs were made you can clearly see where the 8/34 combo triggered an exit and AAPL has continued to fail since then.

But I do want to share this info in advance. I'm seeing possible value in this one if we test key support below the market in the coming weeks. The wider zone of support comes in at the $80-$88 area. Within that larger zone I see a cluster within that stands out at the $83-$85 handles. If/when we get into that area, I will start stalking AAPL for an entry around that general area once again waiting for a trigger that tells me it's worth placing a bullish bet. 


Apple (AAPL)
Source: Dynamic Trader


One more thing, after some bullish activity in the biotechs in the couple of weeks after I shared my work with Jim Cramer, the iShares Nasdaq Biotech ETF (IBB) slammed into some timing cycles were posted and described on a video I did on Twitter.

Those cycles have capped the rally, so far. I have been watching the recent pullback for another possible entry on the buy side and so far have been disappointed with the recent price activity. The decline is much deeper than what I anticipated. Quite a few support decisions have been violated in the process. This means I may be dead wrong on thinking that the weekly support being more important in the bigger picture in this sector. I'm patiently waiting for new buy triggers on those and just have not been seeing any.

Note that when the market doesn't do what you expect it to do, it's best to exit and back off until the next opportunity presents itself. Typically I will key off the SPX cash work to help in my other market decisions. If the SPX can clear important hurdles discussed in my video, I am more likely to go along with any other bullish bets. If it does not, then I proceed with more caution. 

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