Thursday, July 13, 2017

AAPL Apple Monthly Chart; Overbot; Rising Wedge; Negative Divergence; Upper Band Violation; Multi-Year Top in Play

Apple is singing its swan song right now. The monthly chart says AAPL is placing a multi-year, yes, multi-year top currently. If you have enjoyed big profits on Apple, it is likely prudent to say your good-byes and exit stage right.

The red lines show the rising wedge in play over the last couple years which is a very bearish pattern. The collapses from rising wedges can be quite dramatic. The red lines for the indicators show universal negative divergence occurring wanting to see a spank down in price. The MACD line is trying to eke out a tiny bit more of upside strength in this monthly time frame (tiny green line) but the indicators are forecasting that the multi-year top for Apple is likely in.

Price will want to begin retreating on this monthly basis going forward. There may be some sideways jogging action such as down, up, down, but the multi-year top for AAPL is likely in now or anytime say between now and September.

AAPL has violated the upper standard deviation band (pink) so the middle band at 116 is on the table for starters and even the lower band at 76 as the long-term plays out. Price is above its moving average ribbon requiring a mean reversion lower. The RSI is overbot agreeable to a pull back in price.

Note the ADX line that trends lower and trying to get back into the mid to upper 20's to prove that the uptrend remains in a strong trend. You can see it is struggling. If the ADX prints in that pink box in the right margin, Apple has a little more upside in store and that sliver of strength with the MACD will help elevate price, however, and as would be expected, the ADX will likely stall and roll over proving the strong uptrend in Apple price is over. You can see the trend higher in price during 2011 and 2012 was a very strong uptrend, then the uptrend became very weak in 2013. The ADX began moving higher again in 2014 and it was party time in 2015 with a strong upside trend in play again. Last year the strong uptrend in Apple ended and now the ADX is struggling to regain its prior glory.

Keystone was amazed that a lot of you millennials hold Apple stock. All you under 30-year old's own a disproportionally large amount of shares in the top tech companies such as AAPL, NFLX, AMZN, FB, GOOGL and even TSLA. Setting Tesla aside, the charts of the other bigwig tech stocks, that have driven the broad stock indexes higher the last few years, are similar to the Apple chart.

NFLX, AAPL and GOOGL will likely top out with a multi-year top and begin rolling over say, anytime now through October. AAPL has likely printed its multi-year top and is expected to roll over to the downside going forward. Ditto NFLX. These three will likely roll over first and then followed by FB and AMZN a month or two later (say August-November multi-year tops). If you are young and your chest is puffed out since you have made a lot of money on Apple, it is likely wise to cash-out. That goes for any of these hotshot stocks.

You can always scale out by selling one-third of the position today, one-third in two or three weeks, and then the final third in about six weeks. Let that money sit in cash for a while since it is likely more important to be out of the market rather than invested on the long side.

Keystone does not own any position in AAPL currently but both Apple and NFLX are setting up as potential shorts. The shorter term charts can be used to gauge a good entry on the short side. Obviously, if the above stocks place multi-year tops and roll over in the weeks and months ahead as explained, the broad stock market will as well. 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 7:20 PM EST on Monday Evening, 7/17/17: Much-followed Apple analyst Katy Huberty at MS continues raising price targets for AAPL stock. Huberty stands on a soap box and proclaims that AAPL will hit 182 (Apple sits at 149.56 at the 50-day MA at 149.37 so AAPL will make a bounce or die decision tomorrow).

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