Monday, June 5, 2017

AAPL Apple Monthly and Daily Charts; Multi-Year Topping Process Continues

Apple has been one of the leaders this year. The FAANG (FB, AAPL, AMZN, NFLX and GOOGL) stocks are carrying the broad stock market higher with the whole joyous party printing new record highs day after day. Traders high-five each other proclaiming that the party will never end. Joe Retail Investor, anxious to prove himself among coworkers, says he took his whole life savings and placed it into Apple stock. He says famous investor Warren Buffett loves Apple stock so it is guaranteed to go higher. Billionaire Mark Cuban also touts the FAANG stocks. Fundstrat's Tom Lee proclaims that these stocks will climb from +20% to +40% higher from current levels. Every day is a euphoric party.

What do the charts say? As has been the case the last few months, Keystone has been highlighting the ongoing likely multi-year topping process in play. Looking at the monthly chart, the maroon lines show the negative divergence spankdown from overbot levels occurring at the May 2015 market top. The dissenter was the MACD line that remained long and strong so you knew that after a selloff, price would likely come back up for matching or higher highs, on this monthly basis.

Price dropped from the upper standard deviation band to the middle band and even the lower band in 2016 but the central bankers colluded to save the markets in early 2016 and the rest is history. Global indexes have been rallying ever since. Since price violated the lower band it made its way higher to touch the middle band late last year then up to the upper band for the last five consecutive months after the gap-up move. Thus, the middle band at 115 and rising is firmly on the table as well as the lower band now diverging south way down at 75. That 50-week MA at 101 and psychological 100 level will put up a big fight should price come down for a test perhaps next year.

The red lines show negative divergence in play for all indicators but the histogram is eking out more near-term upside juice. The MACD line has momentum as well. Overall, the expectation is that all indicators would not move above the prior highs which makes the multi-year top for Apple very likely. A jog move may be needed to burn off the remaining momentum (down-up-then down) but the chart is very likely indicating a multi-year top playing out. Price gapped up early in the year and is on an island above 127 so the 115-127 landing area is a reasonable target for the months ahead.

On the daily chart, the indicators are all sloping negatively over the last couple weeks but it is not neggie d until price would make a matching high. Nonetheless, it appears that price may be petering out and is agreeable to downside. On the weekly chart (not shown), the indicators are agreeable to downside ahead after a week or two more of topping out.

The tight bands squeezed out a big up move in May (pink arrows). The bands are squeezing in tight for another huge move to begin. Which way? Tight standard deviation bands indicate that a sharp move is at hand for price but does not predict direction.

Long holders of Apple have all their hopes riding on the iPhone 8 to be released in the months ahead. Apple receives an analyst downgrade this morning on worries about the iPhone 8 parts supply line. The charts are not enthusiastic about the road ahead. If you enjoyed AAPL's rise and made money, it is likely very wise to take if off the table and move on. You can scale out with 2, 3 or 4 trades over the next month or two and thereby perhaps benefit from a little more upside while you exit the back door which is far more important. It would not be surprising to see AAPL at 115-127 this year (a -12% to -20% drop) and sub 100 next year (-45% over the next year or two). 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 10:37 AM EST: AAPL is down -1% at 154 to begin the week. Two more analysts jump on the FAANG and AAPL bandwagon. Strategist Chris Verrone of Strategas and Brean Capital strategist Peter Tchir both tout lots more upside for these stocks especially Apple and to buy all the dips. The universal consensus on Wall Street is for AAPL to be at 180-220 next year but Keystone says 80-130. Who will be correct?

Note Added Saturday, 6/10/17: On Friday, 6/9/17, AAPL collapses -3.9% to 149 using the 50-day MA at 148.21 as support. The LOD is 146.02. Apple has not yet been able to overtake its all-time high at 156.65 from 5/15/17.

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