I was asked if I had any updates to share on AAPL (Apple Inc) and figured that as the world's largest publicly traded company & one of (usually THE) most widely held stocks, my thoughts on Apple were worth sharing. In doing so, we'll begin with a look at the recent technical developments over the past several months & near-term outlook, followed by a look at the weekly & monthly charts and my thoughts on where the stock is most likely headed in the coming months & possibly years.
In this post published on April 28th, literally the very day that AAPL printed it's all-time high, I had pointed out several bearish technical developments, including a bearish engulfing candlestick, also stating that "clear bearish divergences are signaling that the odds for at least a substantial multi-month correction or bear market (in AAPL) are elevated at this time."
Just over 3 months later, in this post published on Monday, August 3rd, it was stated that "AAPL (Apple Inc.) is currently testing dual critical support levels: The primary bull market uptrend line generated off the 2009 lows as well as the 40-week/200-day ema. In fact, AAPL has actually broken below the 200-day ema so far today although a weekly close below that level (the 40-week ema is the same as the 200-day ema) as well as the January 2009 primary uptrend line and especially two consecutive weekly closes, would greatly increase the odds that a new bear market (i.e.- drop of 20% or more) is underway in the world's largest publicly traded company." Apple continued to trade below both its 200-day/40-week ema & primary bull market uptrend for the remainder of the week, closing comfortably below both key support levels, thereby greatly increasing the odds that a new bear market was underway.
Fast-forward to August 24th when AAPL printed a low of 92.00, which translates to a drop of 31.6% from the April 28th highs, more than enough to satisfy the definition of a bear market (i.e.- a drop of 20% or more). Now where does AAPL go from here? In my opinion, lower. Much lower.
While a nearly 32% drop in such well run, mega-cap stock as AAPL might certainly be considered more than enough of a drop to alleviate the over-bought, over-owned (and more importantly IMO), over-loved conditions in the stock, nearly everything I see on the charts tell me that AAPL is likely to take out the August 24th lows before it moves back above the April 28th highs. In this monthly chart spanning nearly 32 years, I've marked the top & bottom of every cyclical bull & bear market, calculating the total drop from peak to trough of each bear market. To be accurate, some of those bull & bear runs were so large that there were smaller bull & bear markets (20%+ gains & losses) within but for the sake of simplicity, I only pointed out the major bull & bear markets.