AAPL Apple Weekly and Daily Charts Falling Wedge Oversold Positive Divergence Potential Island Reversal

Lots of traders were tripping over each other to buy Apple last week. Tom DeMark, a noted market timer, gave the go signal for Apple over the last week or so based on his work that shows the downside move exhausted for now.  The green falling wedges are very prominent and are bullish patterns. Price typically finds a bottom and will launch up and out of a falling wedge.  The daily chart is set up nicely with positive divergence that created the bounce a few days ago. The indicators remain sloping upwards which is bull friendly, however, the short red lines over the last couple weeks hint at another test of the low. Note how price sits on an island now on the daily chart, an island under 460. Therefore, a potential island reversal may be on tap where price launches to 485 in a blink of an eye.

The weekly chart is positively diverged (neon green lines for the indicators) with the lower low in price, however, the RSI and MACD line wants to see a lower low on the weekly basis. Also note the sturdy support at 420 going back over the last 18 months.  The folks that ran into Apple to try and catch a bottom may watch a backward slide this week as the chart sets up for a more firm bounce as described above. If a lower low in price prints at 420-440, that will likely set the charts up with universal positive divergence and signal the all-clear for upside. This is an interesting set up since what may happen is a flush move lower, it may be very fast, and some of the folks that bot over the last few days may jump ship in a panic. The move down to 420-440 may come very quickly so only the alert traders may snag it properly.

Overall, Apple has received a serious beating since the Fall, so a more substantive recovery bounce is on tap, but perhaps waiting for the 420-440 print this week is the key, if it occurs.  Projection is sideways to sideways up for the weeks ahead but the 200-day MA has rolled over to a negative slope, the 20-week MA is down thru the 50-week MA, so additional weakness is likely ahead for Apple as 2013 rolls along.  Projection is a move to 420-440 in the coming days, then a move up to 460, then perhaps an island reversal to 485, if not, a simple gap fill will occur and a move higher to say, 480-520, then perhaps reassess at that time. 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 2/4/13 at 12:48 PM:  AAPL at 445 printing at the lows of the day.