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Time To Buy Apple, Amazon

Tickers in this article: AAPL AMZN
NEW YORK ( TheStreet) - Amazon's growth and valuation have provided much fodder for debate: Bears argue the valuation is unfathomable, while bulls talk about the bright future and continue to push the stock higher and higher.

Personally, I see both sides. The stock price continues to go higher, even though profits continue to flatline. But, hey, that's the trend. Why short into that? I never understood that. The bearish rationale makes sense, and I can see why someone wouldn't buy the stock. But shorting it -- at least over a long period of time -- seems to be equivalent of stepping in front of a train.

But the stock could be an excellent buy rnow, after it finally broke out of its short-term downward channel. As you can see on the image below, the stock was already favoring the downside going into earnings.

Chart Courtesy of

Although the results weren't flattering, the stock still popped, hitting a 52-week high of $313.62. The stock had already begun to trend lower, and following the earnings jump, it continued to slide, stuttering against the upper resistance line until finding support near $283.

The $283 to $285 level acted as decent resistance back in June, when Amazon was trying to go higher. As if it were taken from a technical analysis textbook, the stock recently found support near its old resistance levels and has started to move higher.

Last Thursday, Amazon ripped higher and was able to break out from the downward channel and moved slightly higher on Friday, as well, ending the week at $290.01. That bodes well for the stock, and if it can garner some upward momentum, bulls should be pleasantly surprised.

Meanwhile, Apple has been making all sorts of headlines as of late. The stock has been the talk of Wall Street for years now, but over the past six months or so, it's been for all the wrong reasons.

After topping out at $705.07 in September 2012, the stock has been nothing but trouble for the bulls. It trended sharply lower heading into 2013 and didn't stop there, finally bottoming near $380 in April. Since then, however, the stock has been doing a lot of repairs on the technical side of things. Allow me to explain, following the chart.

Chart Courtesy of

The chart was a technical nightmare for bulls and a dream come true for bears. The pink line represents the downward trend the stock followed since topping out in September. However, in the beginning of May, that trend flipped from resistance, to support -- much like the Amazon situation we just talked about.

Moving along, the thick blue lines on the top and bottom represent the longer-term channel for the stock, with a double bottom forming near $380. That is a good sign for bulls.