I have been hearing comments that some of the Magnificent Seven no longer qualify for membership, so I thought a quick look at them might be helpful. I’m going to use weekly charts.
Apple (AAPL): AAPL is dealing with trying to move production out of China, and this week it shut down its EV program. The latter will probably have more effect on the EV industry than AAPL, but we’ll deal with that when we get to Tesla.
Technically, we have a bearish rising wedge and a PMO negative divergence.
Prognosis: AAPL probably won’t be so magnificent for at least a few years.
Amazon (AMZN): AMZN suffered mightily during COVID, but it has had a magnificent rally for the last year. The most obvious problem is that it will run into strong resistance at the all-time highs of 2021, and at its current rate of climb it will hit that resistance in just a few weeks.
Prognosis: Still magnificent, but due to run into long-term resistance.
Alphabet (GOOGL): GOOGL has run into resistance at the 2021 top, and has formed a long-term double top. The rising trend line from the 2022 low is still intact, but there is a PMO negative divergence. If that trend is broken, so will be its magnificence.
Prognosis: Not good at this point. Magnificence is endangered.
Meta Platforms (META): META was setting up for a long-term double top, but it broke out and is now +28% above that resistance. The problem now is that the advance from the mid-2023 consolidation is parabolic, and vertical up moves beg for correction. There is currently a PMO negative divergence, but the PMO hasn’t topped yet and the divergence could be erased.
Prognosis: Still magnificent. Watch out for possible correction.
Microsoft (MSFT): MSFT tried to form a double top mid-2023, but it broke out and moved +22% above that resistance. It has formed a long-term bearish rising wedge, and there is a PMO negative divergence, but price movement is strongly bullish.
Prognosis: Magnificent but with some bearish undertones.
Nvidia (NVDA): NVDA hit resistance at 500 last year and consolidated for about six months. In January it broke out and moved over +60% above the resistance at 500. Its biggest problem now is the parabolic advance from the 2022 lows. As I said before, parabolic up moves beg for correction.
Prognosis: The most magnificent of the Seven. Correction is likely, but magnificence should prevail.
Tesla (TSLA): Apple’s recent exit from the EV business is the most dramatic evidence to date of the EV industry and the public’s disillusionment with electric vehicles. TSLA is currently -50% down from its 2021 all-time high, and my opinion is that it is not going to recover.
Prognosis: No longer magnificent and probably will not recover.
Conclusion: AAPL and GOOGL are fading and, while they are solid businesses, may fall short of magnificence for some years. TSLA is done for. The rest are still magnificent but with some reservations for the intermediate-term. So, Magnificent Five?
Learn more about DecisionPoint.com:
Watch the latest episode of the DecisionPointTrading Room on DP’s YouTube channel here!
Try us out for two weeks with a trial subscription!
Use coupon code: DPTRIAL2 at checkout!
Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin
(c) Copyright 2024 DecisionPoint.com
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.
Helpful DecisionPoint Links:
Price Momentum Oscillator (PMO)