AAPL Apple Weekly Chart; Parabolic Price Move; Upper Band Violation; Overbot; Price Extended

Apple is the favorite flavor of traders these days. It is boosted with a trifecta of joy. First, the earnings beat provided an influx of money into the stock especially as the other FAANG stocks languish. FB and NFLX have fallen into bear markets (down more than -20% off their tops). Second, the hype around the $1 trillion market valuation provided another boost. Young techies especially caught up in the Apple hype run to their broker's placing full paychecks into AAPL stock believing that it will grow to the sky.

Third, the 13F quarterly filings reveal that Warren Buffett's Berkshire Hathaway is buying Apple stock with reckless abandon. Buffett once said he does not own Apple or tech stocks since he does not understand them. Well, now he must fully understand all there is to know about the tech sector. There are a huge number of Wall Street money managers that blindly follow Buffett's every move and jump in to the same positions without performing any due diligence. If it is good enough for the Oracle of Omaha it is good enough for them. CNBC commentator Jim Cramer is another Apple cheerleader telling his listeners and viewers to buy Apple with both hands. Thus, the price is in a parabolic up move currently.

This recent hype around Apple stock is further boosted by last week's interesting action and rally in defensive stocks. The utilities, consumer staples and REIT's print big gains. Many moons ago, before the non-stop global central banker intervention in markets over the last decade, stocks and the economy would typically follow business and economic cycles. When a downturn in the stock market was anticipated, traders would rotate into the safer plays, that typically pay attractive dividends, and hold out there until the coast is clear and a new economic and business cycle would develop and begin.

At that time, traders would rotate into cyclical and growth stocks. These are not your grandfather's markets. All asset classes are boosted into bubble territories due to the never-ending central banker intervention designed to make the wealthy richer (since they own large stock portfolios). Those seeking safety in defensive stocks are wasting their time and only covering themselves with a fig leaf because these stocks are at elevated levels like all other stocks. The central banker intervention has destroyed the expected business cycles.

The reason this is key, is that the boost in the defensive plays last week coincides with more Apple joy. Since pundits such as Buffett and Cramer are telling folks to back up the truck for AAPL stock and buy with reckless abandon, many traders now perceive Apple as a safe-haven play (that will be protected in any stock or economic downturn) and this helps boost the stock into its recent parabolic move higher.

The AAPL gains are obviously news-driven events; earnings, $1 trillion valuation goal, Buffett buying and safe-haven perception. Saying that Apple is an emotional stock is an understatement.

The weekly chart had displayed a doji candlestick but the Buffett hype prevented any trend change lower and instead shot the stock further skyward. Price continues to violate the upper standard deviation bands so a move to the middle band at 187, and rising, is firmly on the table. Price is extended above its moving averages also requiring a mean reversion lower. The bulls have succeeded in creating more juice on the weekly chart since the MACD line squeezed out a higher high as well as the histogram. The RSI, stochastics and money flow remain negatively diverged. There is near-term strength due to the momentum. The weekly chart was set up for a top in about a week or two time frame as previously explained but now that can stretch for another week or two due to the momo.

AAPL has become the darling of the FAANG stocks. Keystone has commented on the AAPL monthly chart and the long and strong MACD line and nothing has changed in this respect. The broad market will likely roll over first in the long-term perspective (months and years) and Apple will likely be one of the last to roll over and die on the long-term basis. Apple will likely make a top on the weekly chart say over the next one to three weeks and pull back perhaps to the middle band which is also the 20-week MA, but then rally again due to the long and strong MACD line on the monthly chart. This places the long-term multi-month and multi-year top for Apple in the late-September-October-November time frame, let's just call it by the end of the year. By the end of the year, the broader market will likely already be rolling over as the SPX monthly chart is in full negative divergence across all its indicators. 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.