June historically has been a neutral month for stock prices. The current technical landscape shows a mixed picture. While the Dow Industrials and the S&P 500 indices are still range bound, the Nasdaq is surging to all-time highs driven by large cap tech stocks. Apple has been a leader and has found its footing again as investors focus on the service subscription income which has grown to more than $38 billion in revenues on an annualized basis. The race is on between Apple and Amazon to determine the first 1-trillion-dollar market cap. Technical analysis shows that the race is close, with Apple in the lead.
Apple Shares Are Breaking Out
Apple shares are breaking out to all-time highs driven by strong earnings results and large purchases from both the company and Warren Buffet. Buffet announced after the earnings release that he had purchased billions of Apple shares when the stock price moved lower in February and March. This was followed by Apple announcing huge buy backs moving forward, which should provide a floor underneath the price of the stock. The breakout now has the stock price geared to test the trillion-dollar market cap prices, which is $203.75 per share. Support on the stocks is seen near the 10-week moving average at 180 and then the 50-week moving average at 167.
Weekly momentum on Apple has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-week moving average minus the 26-week moving average) crosses above the MACD signal line (the 9-week moving average of the MACD line). The fast stochastic has accelerated higher but is overbought. The current weekly reading on the fast stochastic is 97.7, well above the overbought trigger level of 80. This could foreshadow a correction.
Amazon is Also Surging
The rally in the Nasdaq is not only a technology phenomenon. The consumer is very strong and is lifting discretionary shares like Amazon. Amazon makes money when consumers increasing their purchases, which has helped the stock price break out.
Amazon shares are higher for the second consecutive week and are in a race with Apple to become the first trillion dollar company. Amazon will need to hit $2,016 per share to notch up a one-trillion dollar valuation. The share currently show the company closer to $750-billion. Support on Amazon is seen near the 10-week moving average at 1,564.
Momentum has turned positive but the consolidation in the MACD (moving average convergence divergence) index is flat which does not show a heavy acceleration in the shares of the stock. The MACD line recently generated a crossover buy signal which points to higher prices. The fast stochastic has also accelerated higher, but the current reading of 94, is well above the overbought trigger level of 80 which could foreshadow a correction.
The Nasdaq 100 Broke out to Fresh All-time Highs
The surge in some of the large cap technology and discretionary names has helped the Nasdaq 100 breakout to all-time highs. Momentum on the Nasdaq has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. The fast stochastic is also rising reflecting accelerating positive momentum.