Apple Chart Analysis
Apple looks pretty bearish here. So let’s go ahead and a take a look at the chart.
As you can see from January to February, I traced out a head and shoulders pattern, which in the technical universe, is a bearish pattern. It played out and now it’s broken the neckline. You can see I’ve connected the lows in January to the recent lows in the early part of March.
Yesterday was a pretty bad day with pretty heavy selling going on. It was a distribution day; it was a higher volume day than Friday.
It looks like this morning the stock is down a little bit as well. It’s down towards the $171 area.
Indicators are bearish across the board
Looking at the indicators below, you can see that the MACD started to roll over in January from a rather low level. It was starting to move higher, but suddenly has now turned lower for a MACD sell signal. It is oversold but that does not mean buy. Back when the MACD was at a higher level, the stock started moving sideways, a negative divergence.
We hit that peak, which was just below the December highs, and rolled over again. A series of lower highs and lower lows is your text book definition of a downtrend. Apple is in it, you can’t fight it.
The Chandy oscillator, which measures relative strength, is making lower highs and lower lows. You can see that here in the third pane.
And finally, the last two.
Oversold doesn’t mean buy!
The stochastics have reached a pretty oversold level. It could turn up again, but again, the challenge here for Apple is the fact that it’s been making a pattern of lower highs. And if we rally back up to say $177-178, roll back down again, it’s just going to make another lower high on the chart, and we’re going to have that pattern of lower highs and lower lows continue.
Where do we see the potential of the stock stopping and reversing? I’d have to look at the October lows here which come in at around $165. That was the level that the stock took off and really managed a huge move up to the mid $190s in about 2 – 2 1/2 months.
The last chart I’m going to show you is at the bottom – Chaikin money flow. You can see money flow has been out. You don’t have to be a genius to figure this one out. Look at the bottom pane. It’s negative. It’s been making lower highs and lower lows as well.
Try to view this stock without bias
Without any biases – a lot of us like Apple, we like their products and so forth – but taking an unbiased, objective view of looking at this chart you can see it’s clearly bearish, it’s negative.
One thing I was told before is when Apple is leading the markets, you’ve got to be careful. Potentially, Apple could lead the markets downward.
You might say to yourself, ‘Bob, why weren’t we on this thing back in $180-185 when the stock was a lot higher?’
Well, it wasn’t exhibiting those qualities of a bearish stock as much as it is right now.
I’m a momentum player. I buy options. And I think that put options would be a smart move.
Again $165 – it’s only $6 – 7 down from where we’re at now – possibly an area where the stock could reverse. But if it does reverse back up, it’ll probably give you a good opportunity to buy some puts or short the stock.
So that’s the Apple chart analysis.
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