Amazon.com (AMZN), Nvidia (NVDA), Adobe Systems (ADBE), Workday (WDAY) and ServiceNow (NOW): Top tech stocks testing their 50-day/10-week lines. Amazon stock is testing its 50-day line for the first time since April. Nvidia stock, Adobe stock, Workday stock and ServiceNow stock are all just above or below buy points.
The 50-day moving average — and its weekly chart near-twin the 10-week line — is a key technical level. It’s an area where mutual funds and other big institutions will step in to buy shares, supporting a stock. In some cases, that can offer a follow-on buying opportunity. But the 50-day/10-week line can also serve as resistance.
ServiceNow stock has a best-possible 99 Composite Rating. Amazon stock has a 98 Composite Rating. Nvidia and Adobe stocks boast 96 CRs. Workday comes in with a good-not-stellar 90. The Composite Rating looks at key fundamental and technical metrics like earnings growth, return on equity and relative price performance. Top stocks typically have high Composite Ratings when they launch big runs.
Market Rotation From Tech Stocks?
The stock market could be in the midst of a sector rotation. The Dow Jones powered ahead 2.2% last week while the Nasdaq composite edged lower. Industrial, airline, financial and energy stocks fared well, joining health care among top sectors. Meanwhile, tech stocks seem to be slumping. Software, which includes Adobe, Workday and ServiceNow, has been among the biggest losers in recent sessions. Nvidia has been a standout, but the chip sector has been struggling all year. Amazon.com is near a high, but it’s had a long run and the other FANG stocks are struggling to reeling.
Amazon Stock
Amazon.com is just above its 50-day line, which it hasn’t touched since late April. But it’s the third time in the last five months that Amazon stock has tested its 10-week line. Shares have been been drifting lower since hitting a record high on Sept. 3, but are only about 6% off their highs.
Amazon stock has run higher for a long time, though, so it wouldn’t be a surprise to see it consolidate for a period of weeks or months. Other big internet giants, such as Netflix (NFLX), Google-parent Alphabet (GOOGL) and especially Facebook (FB) have been struggling.
Nvidia Stock
The graphics chip maker has been one of the handful of semiconductor stocks to fare relatively well in 2018 even the broader chip sector has lagged. Nvidia stock broke out past a 269.30 flat-base buy point in late August, rising as high as 285.22 on Sept. 4. But since then shares have pulled back. Last week, Nvidia stock fell 4.7% to 263.45, testing its 50-day line. The buy point is still valid, so holding support at the 50-day line will be key.
Another potential concern: Nvida’s relative strength line, which tracks a stock’s performance vs. the S&P 500 index, has been moving sideways for the past seven months. That follows a long ascent for Nvidia stock and its RS line.
Adobe Stock
Adobe stock cleared a flat-base buy point of 263.93 in late August and then again in early September, peaking at 277.61 on Sept. 14. Shares retreated 5% last week to 260.88, back below the buy zone on Friday. Adobe stock is now just above its 50-day line. It’s an area where shares have found support several times over the past year, including earlier this month.
Workday Stock
Shares of the human resources and financial software maker tumbled 8.2% to 138.63 last week, dropping back below its 50-day line on Friday. Workday stock is still just above a 137.53 cup-with-handle buy point, but it’s in danger of erasing a 14% gain from the buy point. Round-tripping a double-digit gain is a strong sell signal.
ServiceNow Stock
ServiceNow stock plunged 9.1% in the four sessions ending Wednesday, falling below a 194.91 buy point and through its 50-day line. Shares sank 6.2% below the entry, not quite enough to trigger the absolute 7%-8% sell signal, but definitely worrisome.
ServiceNow stock rose modestly on Thursday-Friday to 189.69, just above the 50-day line. Shares have made some sloppy, stair-stepping advance over the last several months, with breakouts struggling to work. But ServiceNow has generally moved along with a gradually rising 50-day line.
The RS line, however, has not made much progress over the last several months.
