Chart Wars: AAPL vs. BBRY

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Mar 25th, 2013 | By | Category: Trend Playbook, Trends

The “smartphone wars” have been a hot topic for traders and investors for months now.

Speculation over next-generation smartphones, product launches, sales projections and market share has dominated the discussion. Will Samsung’s new line of phones be able to compete with Apple? Will the new BlackBerry revive its long-suffering parent company? Can Apple deliver a new iPhone that can win back younger customers?

If you’re a tech junkie, these reports can be fun to read. But unfortunately, many novice market watchers use this type of information (and even unconfirmed rumors) to trade stocks. That’s a terrible — and potentially costly — way to play the markets.

Instead of following the tech blogs for news updates, savvy traders should be watching the charts and ignoring the media hype.

Today, I’m going to break down two popular tech stocks, Apple (NASDAQ:AAPL) and BlackBerry (NASDAQ:BBRY). Each chart is sending out important signals — signals that might be contrary to what you might have been reading about each of these companies in the news.

First, let’s check out the newly rebranded BlackBerry:

BlackBerry stock started to perk up back in late September after being trapped in a vicious, multiyear downtrend since 2008. Throughout the fall, the stock offered several solid risk/reward setups on the long side as rumors started swirling around the BlackBerry Z10 and its new, modernized operating system. Unfortunately, as the stock’s momentum increased, so did new reports of BlackBerry’s potential turnaround. New investors swarmed into the stock as the product launch approached…

Of course, this is exactly when the stock started to top out. By early March, BBRY had violated support of its five-month uptrend. Now we’re witnessing the beginnings of an unsuccessful attempt to regain momentum as the stock slips below its 50-day moving average.

Of course, negative analyst notes and reports of soft launch sales are giving investors an excuse to sell today. But the real actionable news was already baked into the chart.

What about Apple?

Here’s a chart from the exact same time period as our BBRY example. But Apple is showing us a completely opposite setup.

You know how this story goes. As Apple fell from its highs, it began to receive more intense scrutiny from analysts and the financial media. Investors started to call into question Apple’s management team, their ability to innovate without Steve Jobs’ influence and the lack of any recent revolutionary product launches.

Momentum investors and latecomers left the stock in droves. The race was on to find the next hot stock in mobile communication devices. So it’s no coincidence that BlackBerry (and plenty of tech gossip) was there to fill the void.

However, now that BlackBerry’s big Z10 launch isn’t exactly wowing the masses, we’re beginning to see new life in AAPL shares. The stock has just recently broken above its 50-day moving average and downtrending resistance. While everyone was paying attention to Samsung and BlackBerry media hype, Apple stock was quietly beginning to repair the damage that has received so much attention over the past six months.

Apple isn’t moving higher because of improving fundamentals or a brand-new iPhone or any of the so-called “catalysts” that market watchers tend to look for. You’re not going to find any tradable information on the tech blogs about this recovery in AAPL shares. All of the information you need is in the charts.

That’s how you cut through the misinformation in a very, very noisy and popular sector. A picture is worth a thousand bucks if you’re trading. Cut through the noise and stick with what works…

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Author Image for Greg Guenthner

Greg Guenthner

Greg Guenthner, CMT, is the co-editor of STORM Signals and Penny Stock Fortunes. He is also the editor of Agora Financial’s Trend Playbook, a free resource for trend followers and technical traders. For close to a decade, Greg has led Agora Financial’s small-cap division, where he founded one of one of the only independent OTC research advisories in the industry. Greg specializes is classical trading techniques and combines timing strategies with his fundamental analysis of small-cap stocks.

He is a member of the Market Technicians Association and hold the Chartered Market Technician designation. 

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