As a follow-up to last week’s AAPL Looking Toppy post, after today’s high volume sell-off that took AAPL down well over 4% earlier today, I’m seeing a few technical developments that have further strengthened the bearish technical outlook that was previously outlined for AAPL (Apple Inc.):
- The RSI has now clearly fallen below the previously highlighted cluster of overbought readings, a common occurrence once a near-term (or more lasting) top in price has been reached.
- A very bearish bullish engulfing candlestick on high volume. Given, there is still 2 1/2 hours left in the trading session as I type this so things could change by the close, but if AAPL were to close at or near today’s low (so far), today’s candlestick will have engulfed the last 10 trading sessions. Even if AAPL were to manage to rally into the close the stock is still likely to print some type of potential reversal candlestick.
- Barring a very sharp & sustained upside move in the stock from here, the MACD is poised to make a bearish crossover which is not only a stand-alone sell signal but such a crossover would also confirm the potential bearish divergence that I had pointed out last week.
- Today’s large move lower is also a failure of the recent breakout to new all-time highs in AAPL as prices has taken the stock back below the Sept 21, 2012 former peak in AAPL.
- Finally, if this bearish rising wedge is to ultimately break to the downside, prices are current trading around the typical distance from the apex where price break below/above wedge patterns.
It will be very interesting to see if what happens on Tuesday when Apple is expected to unveil its new products. Will the news trump the charts or are any tricks that AAPL has (or doesn’t have) coming already priced into the stock? Being that the we are less than a week away from the new product launch, I’m not going to add AAPL as an official short trade idea at this time. My preference would be to see prices break below the bearish rising wedge pattern, especially after the dog & pony show in Cuppertino new week is behind us.