Google Office Building. Image source: bubbletea1, flickr.com
Welcome to the second edition of our stocks selection segment for 2022! In it, we provide a brief outline of three companies of our choosing that could make a good investment. In this edition, we examine three bluechip companies that are scheduled to publish their quarterly earnings for the three months leading to December this week. You can also check out our latest Nasdaq analysis to read more about the current state of the U.S. stock market as a whole.
The Expectations for Another Robust Earnings Quarter Could Bring an End to Alphabet's Correction
Google's parent company is scheduled to report on Tuesday after the market close, and according to the consensus forecasts, the company is likely headed for one of its strongest quarters yet. This could reinvigorate investors' enthusiasm, and thereby bring the recent correction to a close. AAPL is our pick for short term investments.
Alphabet 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
The correction itself appears to be taking the form of a 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. As can be seen on the 4H chart above, the dropdown appears to have bottomed out at the 23.6 per cent Fibonacci retracement level at 2548.48. Not only that but the dropdown was held back by the 500-day MA (in green), which further signifies a probable bullish rebound.
Currently, the price action is about the test the major support-turned-resistance area (in green), whose lower limit is underpinned by the 400-day MA (in purple). A decisive breakout above 2675.00 would thereby signify the continuation of the previous rally. Before that happens, however, the price action could drop to the 23.6 per cent Fibonacci before the necessary support is found.
Amazon at a Major Make-it-or-Break-it Threshold
The online retailer was hit hard following the gradual easing of the first and second waves of restrictions worldwide, as customer demand dwindled. The adverse impact of the decline in new orders was exacerbated by the recent selloff, which is likely to be reflected by the retailer's Q4 report. Wall Street's forecasts anticipate the worst earnings data in over a year to be posted on Thursday after the market close.
Amazon 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
Amazon's shares started tumbling following a breakdown below a major Pennant pattern, which typically entails a probable trend reversal in the making. For the time being, the correction is being held back by the 700-day MA (in purple) at 2710.00, though the expectations for subdued earnings data could propel the dropdown towards the 61.8 per cent Fibonacci at 2447.41. Such a development would allow investors, aiming for the mid-term, to buy the stock at an even bigger discount.
A definite sign of recuperating bullish commitment would be a breakout above the 600-day MA (in orange) and the 38.2 per cent Fibonacci at 2954.07. This would allow the price action to then probe the 23.6 per cent Fibonacci, which is currently consolidating with the 400-day MA (in red).
Starbucks' Share Price May Need the Longest to Recover
Our pick for longer-term investors is Starbucks, which is currently facing some serious downwards pressure. Though, the eventual dip of the correction would entail some excellent opportunities for entries at a discount.
Starbucks 1W Price Chart. Image source: Trendsharks ©, created with TradingView.com
Starbuck's rally was terminated after the completion of a major bearish reversal pattern in the shape of a Head and Shoulders. Subsequently, the price action broke down below the lower limit of the ascending channel and the 23.6 per cent Fibonacci at 108.35.
At present, it is testing the psychologically significant support level at 100.00, which is being crossed by the 100-day MA (in blue). Additionally, the 38.2 per cent Fibonacci at 97.21 is also positioned nearby. This convergence of several crucially important supports at the same place could help the reeling share price to rebound in the near future.
However, failure to do so could be followed by another dive further down south towards the 61.8 per cent Fibonacci at 79.21, with the 200-day MA (in orange) being the only intermediate barrier.
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