Tuesday, October 22, 2013

AAPL Apple Weekly Chart Sideways Symmetrical Triangle Developing Fibonacci Retracements

Apple will be in the news today with the release of the new iPad. AAPL has not been as innovative as years past; they spoiled everyone to expect great things, now the products simply offer case colors or incremental changes in product weight as improvements. The 2012 top was an easy call. At the time, Keystone took a lot of heat but by last Fall, there were no more dissenters. The blatant negative divergence marking the top, along with the doji candlestick, overbot conditions and rising wedge, were all textbook TA for the easy top call. The folks buying at 700 were the sucka's.

Apple languishes over the last year, down to the strong support at 380 (note the cluster of price action in late 2011 at 350-380).  The 320 support holds the stock together and failure at that level would officially bury AAPL into the grave. But AAPL has no worries now, above 5 hundo, and hype growing over the new iPad release. The blue lines show the Fibonacci retracements for the big drop from 700 to 380. The 50% Fib is 532, a stone's throw away, so it is a reasonable expectation to see this print perhaps today. The green lines show a sideways triangle pattern developing. There are 3 options for the downward-sloping upper trend green lines. The indicators are open to this idea as they move sideways and start to converge to a mid-point. The RSI breaks out above its light blue upper trend line. The RSI and MACD line are both long and strong in the 2 to 3 month time frame. This behavior hints at more price upside needed, say 1 to 3 weeks, at a minimum, so the RSI and MACD can negatively diverge to mark the roll over point. The histogram, stochastics and money flow are all negatively diverged over the shorter 2 to 3 month time frame. So price will need to drop, on the weekly basis, then come back up to make sure all indicators are negatively diverged in the 2 to 3 month time frame, then price will roll over, falling back down into the triangle pattern.

So what does all this wind-bag talk say in a nutshell? Price will likely bounce in this 520-540 area for 1 to 3 weeks, perhaps one month. A move to the 62% Fib at 567 cannot be ruled out but over the next week or so it will be apparent whether this is in the works or not. This sideways to sideways up bias action for the days and couple weeks or so ahead should then lead to a negative divergence spank down where price would target 480, then 450, say as we move towards Christmas and the New Year. The upside appears limited from here but you never know if AAPL has a new innovation trick up its sleeve that bounces the stock strongly. If long, you probably want to think about exiting, but you likely have a couple weeks since the RSI and MACD line wants to see another high after a pullback. Scaling-out of the stock say selling one-quarter of the position each week forward and to be fully out one month from now may be a prudent strategy. Apple is not an attractive short play at this time; perhaps in 2 or 3 weeks. 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.

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