Big Tech Good Reactions

April 27, 2023
Author: Peter Stolcers, Founder of OneOption

These stocks have accounted for most of the rally this year and they still have some upside. AMZN after the close today.

PRE-OPEN MARKET COMMENTS THURSDAY – The reaction to mega cap tech earnings has been positive this week and AMZN will report after the close today. GOOG traded a little lower, but MSFT and META had big gains. This morning the S&P is going to challenge the high from Wednesday and we could erase some of the losses the last two days.

GDP came in at 1.1%. This is the first Q1 reading and it is below the 2.3% that was expected. The PCE was also higher than expected (4.2% vs $4.0 expected) and we will get that official reading tomorrow. Personal consumption remained strong.

Next week’s FOMC statement will be very important. Banks are tightening and that could be equal to a 50 basis point rate hike in and of itself. Traders will be watching to see if the Fed softens their tone. They remained steadfast in March even after SIVB failed.

Mega cap tech stocks account for the majority of the market gains this year and the breath has been poor. We are seeing some signs of resistance and the last two days featured some of the heaviest selling we have seen this year.

Big tech companies have reported with the exception of AAPL (a week from today). I believe that the market gains will be hard fought from this point forward. I will be watching for a lower high as the market tries to challenge horizontal resistance. An immediate smack down and a lower high would convey that resistance is stiff and that we might see a pullback. Much of this will depend on the Fed’s statement next week.

Day traders have seen decent volume and two sided action the last two days. I am expecting the same today. There will be resistance at the high from Wednesday and that is where we will open. The steady price action and the heavy volume during the drops the last two days suggest heavy selling pressure. Those sellers are not going away. Our best scenario is a wimpy move higher that stalls at the high from Wednesday. Then we need to watch for a bearish hammer/engulf off of the hod. If that coincides with a bearish 1OP cross we will have a nice set-up for a short. Gap and Go’s are not as attractive for us. Don’t chase the opening move higher. To get my attention, we would have to blow through the high from Wednesday on heavy volume and that is unlikely.

The low and the high from Wednesday are support and resistance. That was a fairly large range and getting out of that range will be an effort.  

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