AAPL Apple Weekly Chart

As Apple goes, so goes the markets.  The AAPL weekly chart is sick, very very sick. We watched the March top form with negative divergence on the histogram, stochastics and money flow, as well as overbot conditions created the spank down. However, as pointed out at the time, the RSI and MACD line profiles remained long and strong hinting that they want to see a higher high in price in the future.  Price came back up after the Draghi and Bernanke money-pumping QE talk late summer into Fall and placed the higher high price high in September at 700 and change.  The red lines show the strong negative divergence and overbot conditions, that forecasted a strong smack down, which occurred. Apple fell from 705 to 505, 200 handles, 28%.  At a minimum, a dead cat bounce was required.

Note the weak and bleak profile for all the indicators. As price placed the low a couple weeks ago at 505, matching the May bottom, the indicators did not show any positive divergence, quite the contrary, this chart is sick.  A relief bounce occurs anyway and the Apple bulls are already telling you to jump in with both feet again. Of course, these people telling you that are pumping and dumping.  The red square shows the large volume of rats leaving the sinking ship.  Over 90% of the funds own Apple stock so another leg lower would have strong negative implications for the broader markets. The weak and bleak indicators say that the bounce was simply a dead-cat bounce and the downside should resume at any time.

Using Keystone's 80/20 rule, where 8's lead to 2's and 2's lead to 8's, the close under 620 in late October paved the way to 580. The bulls stick-saved the 520 level since a close under did not occur, the 505 was the intraday low. A print under 520 should lead to 480. On the way back up now, a gap big enough to drive a truck thru is left behind at 529-540 so keep that in mind as time moves along.  Price moved above the 50-week MA at 563, then above the 20-day MA at 566; watch this closely.  There is a gap fill needed at 575-580 only a few bucks higher than the current price at 572. If a close above 580 occurs, the 80/20 rule says that 620's would be on the table.  Thus, this action at 566-580 is a very important inflection point for Apple. Bulls want to print a closing number above 580 since this makes 600+ likely. Bears need to fill the gap at 577-ish, and reverse, dropping back under the 20-day MA which will indicate all systems go for the downside. Note that the 20-week MA is 620.

Projection is lower numbers for AAPL moving forward for the weeks ahead. Scaling in with a short from here and higher should be considered relaizing that a close above 580 will likely tag the 620 which should be the near-term top. It will be not at all surprising to see Apple start lower again from the current levels at 572-580. The blue lines show important support levels at 520, 430, 360 and 320.  A move to the 420-440 level appears very likely. 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 11/26/12 at 8:08 PM:  AAPL closes at 590-ish, so the door would be open to the 620s. AAPL can likely be shorted from here on up.