Comparison of RIMM, AAPL, and GOOG

Jun 28, 2008: 12:52 PM CST

Technology stocks have been in the news lately, so let’s take a quick look at three very popular stocks showing similar patterns:  Research in Motion (RIMM), Apple Inc (AAPL) and Google (GOOG):

RIMM Daily:

RIMM missed earnings slightly, which sent traders punishing the stock mercilessly, plunging it beneath its strong trendlines and key moving averages.  A ‘flat’ momentum divergence preceded the drop.

Clearly, investors wanted more than they got from this stock, and sent prices lower, shocking many individuals.  Nevertheless, from an educational standpoint, notice all the clean buy signals generated from rests of the rising 20 and 50 period moving averages (black arrows) prior to the large volatile drop. The 200 day moving average could be a potential support for price.

I’m not sure anyone saw a drop of this magnitude coming, but clearly playing ahead of earnings on volatile technology stocks can be harmful to your account.  I advocate stepping aside ahead of earnings and then playing the earnings reaction.

AAPL Daily:

Apple stock, since the announcement of the new iPhone, has been under pressure, and is now testing (successfully so far) the rising 200 day moving average.  This level is the target for any short-seller, and is a potential buy signal for Apple bulls who aren’t already long.

Should price fall beneath the 200 day, it would become difficult to be an Apple bull (short term), but I suspect the bulls will make a valiant effort and could rally price at this point.  Also, volume has been declining through the selling, which is theoretically bullish.  There is also a mini-positive momentum divergence as price made its recent low (momentum did not confirm the new price low).

GOOG Daily:

Unlike RIMM and AAPL, Google actually has fallen beneath its key moving averages and could be breaking a bearish descending triangle pattern and could be headed lower in a potential attempt to close the gap (or at least part of it).

Price formed a ‘hammer’ or ‘dragonfly doji’ which could be a bullish pattern – any rise above $550 would temporarily invalidate the bearish descending triangle and pop price back above its key 50 and 20 period moving averages, which would shift price back into the bullish camp, but continuation to the downside, especially if sellers can break price beneath $500, would set us up for a trek to lower prices.

Like AAPL, momentum is making a small mini-positive divergence as Google hit a new swing low.

Use higher time frames on these key stocks for deeper analysis, but always trade them with respect for their volatility.

1 Comment

One Response to “Comparison of RIMM, AAPL, and GOOG”

  1. vinaydh Says:

    I think GOOG is the weakest of all three. The way the market is falling apart calmly; I think all three have significant downside risk.
    All the indicators that would signal an interim bottom are quite a ways off from where they were at the March bottom and yet the indexes are flirting with the lows of March. In case of Dow; it has broken those lows. The BKX is approaching 1999 levels. It is foretelling trouble ahead. I think 50% retracement of the last 5 year bull run can take it to 1180 easily in the next few weeks. I think that would be enough to jolt the people out of complacency. I have been hearing that the markets are oversold and due for a bounce but hasn’t happened so far. It may happen next week but betting on that looks like a foolish bet for now. The only sure bet is the short side until we see the panic readings of March. I think that would coincide with 1180 s&p or else we go to the next stop 1085.