Tuesday, January 5, 2016

AAPL Apple Daily Chart Bear Flags H&S Oversold Falling Wedge Positive Divergence

Apple has been punched in the face from the November top at 123 to 102 now; -17% drop in two months. Ma and Pa Kettle invested their entire life savings in Apple stock this year because the guy on television said so; now they are eating franks and beans for dinner tonight wondering what to do as they lose money each day. The red line and dots show the quadruple top during the spring and summer. Keystone pointed out the neggie d in July (red lines) and the spankdown occurred as forecasted.

The bear flag patterns jump out from the chart. AAPL had that odd spike lower in August so two separate patterns are projected to provide two different down side targets. In a bear flag, the first leg makes its move lower, then there is sideways consolidation through the flag, or pennant, pattern with a slight upward bias, then the second leg lower begins which should match the first. The patterns yield downside targets of 93 and 58, call it a 60-95 landing zone.

The brown lines show an H&S pattern in play (you will have to increase the time frame on the chart to see the left shoulder) with head at 132 and neck line at 102 which targets 72 if the 102 gives way. The 72 is within that 60-95 landing zone.

Price is violating the lower standard deviation band so a move back to the middle band, at a minimum, at 110 and falling, is in play. The oversold conditions are bullish. Price action is creating a falling wedge pattern that is bullish. The green lines show positive divergence that is bullish all in the daily time frame. The red line on the MACD is weak and bleak wanting one more low in price after a bounce.

Thus, Apple should bottom over the next day or two, when the MACD line goes possie d, and a relief rally should occur probably back up to 105-110. The weekly and monthly charts indicate more weakness for Apple this year and the 60-95 landing zone described may occur but it may take a few weeks or months for price to deteriorate lower to that landing zone.

In the very near tern, AAPL should bounce. Considering the nasty monthly chart for Apple, however, with weak and bleak indicators, if long it is prudent to exit the stock as it will likely print lower lows and lower highs throughout this year leaking lower like a slowly deflating tire. It will not be surprising at all to see AAPL in the 60-80 range at the end of the year. 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 at 6:55 PM EST on Wednesday evening 1/6/16: Apple continues lower printing a 99-handle today and closes at 100.70. The daily chart remains partially set up with possie d. The RSI and MACD line will have to positively diverge on te daily chart to create the near-term bottom so Apple should bottom say in a day or three ahead and receive a relief rally.

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