I'm Eyeing This Breakout for a Mega-Cap Tech Name
If this tech giant can close above a certain threshold, I anticipate a breakout.
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Not everything goes according to plan.
We would all love it if every stock we bought went straight up the day after we entered the position, but markets are never that kind. Sometimes, markets can be downright cruel.
That was the case with the Financial Select Sector SPDR XLF. A few days ago, the ETF appeared to be breaking out higher, heading for new highs. Two trading days later, the price has reversed, the moving average crossover that looked promising is now neutral at best and whatever momentum the financials had appears to be gone.
Qualcomm QCOM looked ready to grab the reins from Nvidia NVDA for the short-term and to lead semiconductors charging higher. It let me look good for one day before it came crashing back down to earth. Shares have given up around 15% from their highs just last week. While this only takes us back to the same levels of one month ago, it creates a bearish and somewhat scary-looking daily chart. If bulls don’t step in today or tomorrow, we might need another 10% lower to find strong support.
If I wanted to stay in the mega-cap tech names, I would look at the Mag 7 component, Meta Platforms META, better known as Facebook. April ended in a rough way for Facebook, but shares have been moving steadily higher, needing only two weeks to fill the hole left by a huge gap down opening.
After an early June breakout, shares have dipped over the past two weeks, but buyers have found their way back into Facebook this week. The cup pattern, a bullish consolidation, may see a few days of sideways movement; however, a close above $515, especially on consecutive days, should trigger a breakout that could take the stock as high as $535.
I anticipate some resistance hitting the April highs around $530, so the prudent move would be to peel off a portion of the position on a breakout that hits $530. If shares close below the 21-day exponential moving average (EMA), the breakout is dead, and it is time to hit the sidelines until we have more clarity.
At the time of publication, Byrne had no positions in any securities mentioned.
