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This is a daily chart of AAPL. It has now filled the gap I suggested as a price target for this move down, and has fulfilled the measured move for a descending triangle that I projected in January.
Now it is in an interesting position I think. There is a building bullish divergence on the MACD daily chart, but at the same time it is sloppy and not a classic divergence with confirmation. This may suggest weakness. From looking at the MACD below the price chart we can see that it is forming a triangle type of pattern which suggests it may be wise wait for the MACD line to rise above its recent 2-19-13 peak before considering a long position.
Given that the general market appears toppish and the QQQ is displaying a head and shoulders top, if the indexes top out, it would be interesting to see what happens with AAPL which is already down considerably. It would be a little hard to imagine it able to make a major rebound in the face of a downtrend, but then again, it has sold off in the face of an uptrend.
Another strategy would be to await a higher bottom in AAPL on the daily chart followed by a technical buy signal or a price breakout to create a higher low and a higher high, giving some confirmation of an uptrend.
But above all I would suggest that history shows that the biggest winners of the bull market and the most heavily institutionally owned stocks in the bull market may often experience extensive and often very choppy downtrends when a bear market commences.
So understand that this price break in AAPL is of a serious nature compared to the corrections in the bull market, and it may be a harbinger that the bull is over for at least the time being. So the question becomes whether it is worth looking for a buy in AAPL if we don't expect the bull to resume and make higher highs in the stock.
I think it is best to simply treat it on a trading basis now, as opposed to an investment candidate at the current time.
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