Friday, January 30, 2015

AAPL Apple Daily Chart New All-Time Record High Sideways Channel Negative Divergence Developing

Apple prints a new all-time record intraday high today at 120.00 to the penny. Interestingly, AAPL then fell on its sword and retreated without printing a new all-time closing high. The 119.00 on 11/26/14 remains the all-time closing high. Last time the AAPL charts were posted sideways was the projection which occurs. Apple has moved through the 107-120 blue sideways channel for over three months.

The red lines show negative divergence in place now that price printed a higher high. The short green lines show some remaining long and strong juice for the near-term so the projection would be that price prints another high, probably a new all-time closing high, but the next price highs should serve as the top. The weekly chart is negatively diverged indicating a double top pattern as very likely. So price may bounce over 120 on Monday or pull back a couple more days then go back up to 120. The 120-130 area is in play for the few days ahead as it tops out. The approach to AAPL would be scaling out if you are long. Apple is not desirable as a long play due to the neggie d. A short would be possible but best to wait for a few days or week or two as described when price should top out.

Since the charts are hinting at topping behavior, the assumption is that the Apple Watch may end up as a dud. The nice thing about cell phones was being able to ditch the watch and gain freedom for your wrist. Who wants to go back to something strapped around your wrist? The Watch is Tim Cook's big initial technology product offering and if it fails confidence will be lost in his leadership. If the global economy continues to cool, folks will not have money to spend and all Apple product sales will suffer including the transactions on Apple Pay. The mobile payment technology is another unknown. Why would you add another level of complexity to your life with Apple Pay? The system cannot handle all transactions so you have to have a credit card anyway so what is the point of Apple Pay? Many early adopters want to be cool so the only folks using the system are the ones telling each other how cool they are using Apple Pay. Get the system working for 100% of transactions in a few years time and that is when Keystone will join the club.

So the projection is for AAPL to remain buoyant for a few days or week or two. Watch the RSI to see if it becomes overbot, or not. The short green lines need to turn red with negative divergence when price makes a new high and that will take a few days ahead. Once that occurs, the weekly chart should remain negatively diverged and the top should be in for Apple. From this 120-130 area the downside would be the lower channel rail at 106-107 for starters, then the gap fill at one hundo then 95 support then likely lower as the year ends and 2016 begins. The key to Apple will be the price action in February especially early February. With such a successful company it is hard to imagine an extended pull back will occur as described. After all, AAPL can increase the buyback and boom, price can bounce in a heartbeat. Or activist investor Carl Icahn may create drama boosting the price.

Even though a stock is a great company that fact can be detached from stock price. The PE remains low but buybacks have a way of distorting these values; the PE of 9 to 12 is 12 to 15 without the buybacks and obviously not as cheap. Apple will be interesting to watch going forward. Keystone does not have a position long or short and does not plan to trade Apple. If long take the money and move on. If thinking about going long AAPL it is likely best you don't. 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.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.