Oh, those momentum stocks!

Apple  (APPL) , Amazon.com (AMZN) , Alphabet (GOOGL) and Facebook (FB) beat their third-quarter earnings-per-share analysts' estimates, but only Alphabet had an initial positive reaction. Disappointing forward guidance caused each of these benchmark stocks to lose their technical momentum. Each will likely end this week with negative weekly charts.

On Oct. 24, I explained the importance of earnings from momentum stocks, and how negative reactions would be a problem for the stock market. The importance of tracking technical momentum allows investors to follow the possibility that uptrends for stocks can turn on a dime.

Apple set its 2016 intraday high of $118.69 on Oct. 10. The stock closed Oct. 25 at $118.25 then came earnings. On Oct. 26, the stock opened at $114.31 creating a price gap from the Oct. 25 low of $117.31. The stock is now below its 50-day simple moving average of $112.50 with the 200-day simple moving average at $103.47.

Amazon.com set its all-time intraday high of $847.21 on Oct. 6. The stock closed Oct. 27 at $818.36 then came earnings. On Oct. 28, the stock opened at $782.49 creating a price gap from the Oct. 27 low of $815.43. The stock is now below its 50-day simple moving average of $800.76 with the 200-day simple moving average of $693.60.

Alphabet set its all-time intraday high of $839.00 on Oct. 28, on an initial positive reaction to earnings. The stock reversed quickly and is now below its 50-day simple moving average of $805.19 with the 200-day simple moving average of $759.29.

Facebook set its all-time intraday high of $133.50 on Oct. 25. The stock closed Nov. 2 at $127.17 then came earnings. The fact that the stock was below its key weekly moving average of $128.57 with weekly momentum projected to fall below the overbought threshold of 80.00 it was time to be cautious on earnings. On Nov. 3, the stock opened at $122.00 creating a price gap from the Nov. 2 low of $126.28. The stock is now below its 50-day simple moving average of $128.53 with the 200-day simple moving average of $117.92, which was tested in after-hours trading on Nov. 2.

Apple, Alphabet and Facebook are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL, GOOGL and FB? Learn more now.

Here's the momentum stock scoreboard.

 

The weekly charts shown below show a red line through the price bars, which is the key weekly moving average (a five-week modified moving average). The green line is the 200-week simple moving average, which is considered the "reversion to the mean." The study in red along the bottom of the chart is weekly momentum (a 12x3x3 weekly slow stochastic), which scales between 00.00 and 100.00, where readings above 80.00 indicates overbought and readings below 20.00 indicates oversold.

By observing stochastic readings momentum investors can judge when to reduce long positions. The 12x3x3 weekly slow stochastic is based upon the last 12 weeks of data -- each week's high, low and last prices. This measure of momentum rises as new weekly highs continue and with the last prices closer to the highs. When this pattern changes and weekly last prices are closer to the lows, the stochastic reading will begin to decline providing an early warning to reduce holdings.

Here's the weekly chart for Apple.

Courtesy of MetaStock Xenith

The weekly chart for Apple will be downgraded to negative given a close Friday below its key weekly moving average of $112.16, which indicates risk to the 200-week simple moving average of $95.47. Weekly momentum is projected to decline to 79.97 down from 86.38 on Oct. 28, moving this reading below the overbought threshold of 80.00.

Investors looking to buy shares of Apple should do so on weakness to $99.94, which is a key level on technical charts until the end of 2016. My annual pivot of $110.22 remains a magnet. Investors looking to reduce holdings should consider selling strength to $118.83, which is a key level until the end of next week.

Here's the weekly chart for Amazon.com.

Courtesy of MetaStock Xenith

The weekly chart for Amazon is negative with the stock below its key weekly moving average of $792.05 and well above the 200-week simple moving average of $441.40. The weekly momentum reading is projected to decline to 64.52 this week down from 78.11 on Oct. 28, trending below the overbought threshold of 80.00.

Investors looking to buy Amazon should consider doing so on weakness to $721.28, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should sell strength to $831.06 and $852.72, which are key levels on technical charts until the end of next week, and until the end of 2016, respectively.

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