Charting Tesla, Apple, and Netflix.
Some of the most widely traded stocks in the market just happen to have incredible charts this week. Let's get right into it.
Lots of questions about Apple as earnings are just a few days away. Despite Apple's recent pullback, the stock remains within a bull channel. As long as Apple stays within that channel, the bullish trend is intact.
If you've been waiting for a pullback to buy Apple, now could be the time. The stock's relative strength index, or RSI, is no longer giving an overbought reading. Instead, Apple's RSI is near 50, indicating a neutral reading.
Friday's pullback should have been anticipated, due to the candlestick pattern that preceded it. That pattern, known as bearish engulfing, signaled that a pullback was about to occur. The large red candle actually engulfs several candles, shaded in yellow.
Like Apple, Tesla's RSI is no longer in overbought territory.
What's the most important thing to understand about Tesla's chart? Look at the stock's 20 day moving average, in black. Since the beginning of May, Tesla has bounced from that indicator repeatedly (arrows). When Tesla dropped sharply on Friday, where did the stock find support? You guessed it, right on the 20 day moving average. This week, it's crucial to see if Tesla can hold that line.
Netflix formed a bearish candlestick pattern earlier this month, called a dark cloud cover. Netflix has been moving lower ever since, and is headed toward its 50 day moving average. That moving average has supported the stock a half dozen times over the past four months. Like Apple and Tesla, Netflix currently has a neutral RSI reading.
Tesla and Netflix have already reported earnings, Apple is scheduled for July 30th after the closing bell.
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Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.