Monday, November 19, 2018

AAPL Apple Daily Chart; Apple Enters Bear Market; H&S; Positive Divergence Developing; Lower Band Violation

Apple has collapsed -20.4% off the top at 233.47 in early October slipping into a bear market. CEO Cook cradles his head in his hands and wonders what Steve Jobs would do? The stories continue to mount that Apple is paring back production on its new iPhones. This would be done if the demand is soft since you do not want to be stuck with an inventory glut that would then lead to a markdown.

The global smartphone market has been peaking, leveling off and rolling over. Most folks that wanted a smartphone own one. Consumers are starting to hold on to phones longer since they are expensive. The new adopters finally coming to the smartphone market are thrifty and tend to buy cheaper models. The competition is fierce with everybody and his brother making smartphones and they all look and operate the same basic way. Apple relies on iPhone sales to make its quarterly numbers so the path ahead becomes dark.

The red lines show the neggie d spankdown Keystone talked about as it formed and played out. Price is spanked down in October and then soils the bed in November. That is an ugly drop. From hero to zero. Warren Buffett grabs his chest falling backwards into his easy chair yelling at his secretary to find his heart medication.

The orange lines show a head and shoulders (H&S) pattern with head at 233 and neck at 214-ish. That is a difference of 19 so the downside target is 195 if the 214 is breached. It was breached and the target was achieved satisfying the H&S pattern.

The blue circle shows lots of congestion from June and July in that 180-195 range. Price may want to chop around in here for a while. The green lines show the falling wedge which is bullish also the positive divergence with the RSI, histogram, stochastics and money flow all agreeable to price bouncing in this daily time frame. The MACD line, however, remains weak and bleak. Thus, price will likely bounce for a day or two, but then come back down again for a lower low due to the MACD line. At that time say 2 to 4 days out, the MACD line should turn possie d and that will set things up for a relief rally for the daily time frame.

So if you are thinking of going long, maybe hold off when you see the pop occur tomorrow and/or Wednesday. When price then comes back down maybe buy that bottom for a ride higher in the daily time frame. A move up to the 194-ish level is a potential target.

Price has violated the lower band so the middle band at 205, and dropping, is on the table. This week is goofy because of the Thanksgiving Day holiday. Friday is a half day and usually bullish. So AAPL may create this short term buy on Wednesday, Friday or next Monday or Tuesday.

Taking a look at the AAPL weekly chart, whoa, that is an ugly one. The indicators are all weak and bleak wanting lower lows in price after any bounce should occur. AAPL is very near the lower standard deviation band on the weekly at 183.

Taking a look at the AAPL monthly chart, remember, Keystone posted this chart several times all year-long explaining the developing topping process in Apple and the roll over to the downside. Interestingly, the MACD line on the monthly peaks exactly with the price peak. That is not negative divergence. Thus, despite the Apple carnage, on the monthly basis, the door is left slightly open that price will at least come up to try and print a matching high again, on the monthly basis. The next few weeks and month or two will tell the story.

Thus, AAPL will likely pop for a day or two, then retreat again for a day or two, this dip can be bot as long as the MACD line above is positively diverged, and then you must remain extremely nimble for the long trade. Apple should rally for a few days or week or two to that 194-ish. If so, and you try the long trade, git out of Dodge quick, because that weak weekly chart will reexert its influence and AAPL will head lower to new lows again. In an ideal scenario, Apple will rally in this daily time frame as explained and that trade can be exited and directly flipped into a short position against AAPL to ride the way lower due to the ongoing weak and bleak weekly chart. The weakness should continue into Christmas next month in the weekly time frame and when that sets up with positive divergence we can assess if the monthly chart will help create a strong future rally, or not. 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 Sunday, 11/25/18: AAPL ends the week crashing -11% to 172. Apple is getting hit with a lot of negative news stories about cutting iPhone production due to lack of demand. Price did not get the short bounce only the additional downside expected in this daily time. Same dealio is in place only now the RSI is weak and bleak in oversold territory. Apple should bounce for a day or two then come back down again for more matching or lower lows in price. Perhaps a bottom in this daily time frame is ahead for middle to the back end of this coming week. You have to wait until the RSI and MACD line positively diverge.

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