AAPL Apple Falling Wedge Downward-Sloping Channel Earnings Disappointment 1/23/13 Gaps

Apple is set for a gap down from the disappointing earnings. Pre-market is 461. The purple falling wedge was pinching price inwards ready to launch it up and out of the wedge, however, the earnings are going to instead create a sharp drop at the opening bell. AAPL  may immediately bounce, watch to see if it returns into the falling wedge by moving above the lower purple line at 475. This action would maintain the falling wedges in play, the purple wedge and the alternate lower wedge line shown by the neon blue line. If you extended the falling wedges, the apex would be at 440-450 in April, so Apple could trend lower for a while maintaining the falling wedge before the breakout to the upside occurs.

The headache for the stock is that now with the gap down, the dark blue trend line may come into play which will nullify the falling wedge and instead create a steady, steeply-sloped, downward channel which would point to much lower prices forward in a shorter time period such as shown with the blue line in the margin.  The purple line shows the breakout from the falling wedge.  A move like today needs a couple few days to play out to see how the chart shakes out. Obviously the encouraging positive divergence green lines will likely disappear after today's drastic move. The anticipation would be that price settles out in the 460-480 zone and then moves up and out of the falling wedge but next week will show a better picture. The close above or below 475 is likely important today, above 475 will maintain the falling wedges in play and a bounce coming. Closing below 475 will further show that the stock is broken and perhaps breaking down further in the short term. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 1/24/13 at 10:41 AM:  AAPL is down 10% to 463 right now.  The LOD thus far is 450.66 at 9:43 AM.

Note Added 1/24/13 at 1:04 PM:  AAPL is down 9% to 455 right now.  The LOD is holding. Associated names that supply parts and support to Apple products are CRUS, NUAN, TQNT, AVGO, DVTI, ALTR, MRVL, BRCM and QCOM and all are down big, out back behind the shed taking turns bending over for their ongoing beatings.

Note Added 1/24/13 at 6:37 PM:  AAPL closes the day down 12.4%, ouch, to 450.50. The LOD is 450.25 so price closed at the lows. Note how price targeted the gap fills from February 2012, one year ago. Price closed on the dark blue line now placing the downward-sloping channel in play. The positive divergence green lines remain somewhat in play although the RSI and money flow now want some sideways and lower action before setting up a substantive bounce. With such a drastic drop today, Apple will take a dead cat bounce tomorrow but it is likely best to let the smoke clear and take a look at it early next week. The gap-down did some technical damage. Even after a bounce occurs, the weekly chart will now want to see lower lows again, before a more long-term up move can be established, and this may be three weeks out.  Thus, some tricky trading ahead. The guess for a more tradeable bottom would be two or three weeks from now at 420-ish. Between now and then may be a bounce from 430-450 up to 480-520 then down to 420-ish then thru 420-520 into summer time where another leg lower may be on tap into the 300's. The charts next week will lay out a path.