Apple, Amazon, Microsoft Lead Tech Giants Close To Finishing This Classic Bullish Base


Apple (AAPL), Amazon.com (AMZN), Microsoft (MSFT), Adobe (ADBE), and JD.com (JD) are top tech stocks in proper bases not far from buy points. But all five are also working on handles that would give investors an even earlier chance to buy the large-cap stocks.




X



Amazon stock already has a handle, at least on a weekly chart.

Tech Stocks With High Ratings

One way to find the best stocks is to look at their IBD Composite Ratings. The Composite Rating compiles scores on key fundamental and technical metrics: earnings and sales growth, profit margins, return on equity and relative price performance.

Amazon stock and JD.com have perfect 99 out of 99 Composite Ratings. Adobe has a 97 rating, Microsoft a 93 and Apple a 90 rating.

Investors should be focusing on stocks with a Composite Rating of 90 or higher but it isn’t the only metric investors should keep track of.

Adobe is ranked No. 7 on the IBD 50 list. Amazon is ranked No. 18 and Microsoft is 35.

Adobe, JD.com and Microsoft stock are on IBD Leaderboard. Apple and Amazon stock are on SwingTrader. Microsoft and Adobe stock are on IBD Long-Term Leaders.

Get A Handle On This Classic Base

All five stocks have cup bases, a sound CAN SLIM pattern. But they are in the midst of forming handles, much like the major indexes. The cup with handle is perhaps the most classic bullish base.

A handle offers a lower buy point — 10 cents above the top of the handle. A handle needs at least five days on a daily chart or one week to form, but can run over several weeks. The midpoint of the handle must be above the midpoint of the base. It must be flat to downward-sloping, ideally in light volume.

The goal is to shake out weak holders, not see a big money exodus.

Apple Stock

Apple stock currently has a 138.08 buy point. But if it trades in its current range on Monday, it’ll have a proper handle on a daily chart with a 125.29 entry point.

Apple announced its iPhone 12 lineup on Tuesday, including its first-ever 5G handset. Shares of Apple stock dropped 2.7% Tuesday following the iPhone 12 announcement. It was the stock’s worst one-day reaction on an iPhone announcement. But that followed a 6.35% spike on Monday.

For the week, Apple stock rose 1.75% to 119.02.

Apple shares are still up 69% over the prior six months.

The consumer tech giant is the top-ranked stock in IBD’s Telecom-Consumer Products group.

Apple is scheduled to report fourth-quarter results on Oct. 29. Analysts see Apple earnings per share falling 9.2% with sales down 0.5%. Apple earnings growth has averaged 13% over the past three years with sales gains of 6%.

Microsoft Stock

Microsoft stock has a 232.96 buy point. But it could have a handle after Tuesday on a daily chart, giving it a 225.31 entry.

Shares climbed 1.8% to 219.66 for the week.

Microsoft is the No. 2 stock in IBD’s Computer Software-Desktop group. The company will report fiscal Q1 results on Oct. 27. Analysts see EPS jumping 11% with revenue up 8%.

Microsoft’s Xbox Series X console will be in hot demand during the holidays, even in a season dampened by Covid-19. The Series X console will hit store shelves on Nov. 10. Analysts expect the consoles to be in short supply after preorders sold out quickly.

Adobe Stock

Adobe stock is consolidating with a 536.98 buy point. But a handle after Tuesday would give investors a 519.70 entry point.

Shares edged up 0.1% to 502.82 for the week.

On Aug. 20, the stock broke out of a second-stage flat base at a buy point of 470.71. It then hit an all-time high of 536.88 on Sept. 2.

Adobe is the top-ranked stock in the Computer Software-Desktop group.

In September, Adobe reported a 25% jump in Q3 EPS, beating Wall Street views. Sales climbed 14%, just short of estimates.

Amazon Stock

Amazon stock has a 3,552.35 buy point on a daily chart. On a daily chart, it needs a couple more days for a proper handle, offering a 3,496.34 entry point.

But on a weekly chart, Amazon already has a handle thanks to its 0.4% dip to 3,272.71.

The coronavirus pandemic has pushed the stock to new heights after months of moving sideways. The stock hit a one-year low on March 16 as lockdowns were implemented across the U.S. But shares then more than doubled to a new high as customers bought home goods and other products while many brick and mortar stores remained closed.

Amazon held its annual Prime Day shopping event Oct. 13-15. The company never releases Prime Day figures but has said for years that its sales top other major event sales like Black Friday. Estimates on sales for Prime Day this year ranged from $7.5 billion to $9.9 billion, the midpoint of which represents what is believed to be a 40% increase from last year.

Amazon will announce Q3 results on Oct. 29. Analysts see Amazon earnings per share soaring 72% with revenue up nearly 33%.

JD.com Stock

JD.com stock has an 86.68 buy point. But it’s carving a handle that’ll be ready after Monday, offering an 85.49 entry point. The Chinese stock hit a record 86.58 on Sept. 2 as it continued climbing after a strong earnings report.

Shares advanced 2.2% to 81.52 last week.

JD.com stock has more than doubled this year amid increased consumer spending on home furnishings and groceries during the Covid-19 pandemic. JD.com sells everything from electronics and apparel to fresh foods. The company is on track to pull in more than $105 billion in revenue for 2020.

JD.com is the top-ranked stock in IBD’s Retail-Internet Group.

Follow Gillian Rich on Twitter @IBD_GRich for investing news and more.

YOU MAY ALSO LIKE:

Market Rally At Turning Point; Watch These Stocks

Best Chinese Stocks To Buy And Watch

Catch The Next Big Winning Stock With MarketSmith

Best Growth Stocks To Buy And Watch

Is Amazon Stock A Buy Right Now? Here’s What Earnings, Charts Show





Source link