AAPL Testing Critical Support

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.

Since pointing out a possible top in this post the day Apple printed it's all-time high back on April 28th, this market leading stock has now fallen over 12% (exceeding the traditional definition of a correction of a 10%+ drop). AAPL has also traded within 2% of the second downside target (T2 at 15.25) so far today. That target was listed in that April 28th post, when it was stated that "Should we get some solid follow-thru to the downside on AAPL in the coming days, my expectation would be for a move down to the 40-week EMA in the coming weeks to months (40wk-ema is the same as the 200-day EMA), which would correlated to about a ~13% drop, depending on if/when prices get there."

Where do we go from here? Well, as was stated here in the last update on Apple a few weeks back on July 9th, the stock is trading at support so those who remain longer-term bullish or even those looking to just play a bounce off support could certainly take a long entry here with stops not too far below (buy support, sell resistance = Trading 101). As back then, I continue to believe that the technicals point to a downside break of these key long-term support levels in the very near future and as such, prefer to wait for a confirmed sell signal on AAPL before shorting (although I am modestly short QQQ and may just add to that position in lieu of a short on AAPL). Although AAPL is not an official trade idea at this time, I have added one additional price target, T3 at 106.20, which is likely to be hit, should we get a weekly close below those key support levels. That target is set just above a support zone that runs from about 104-106.

Aug 3, 2015 2:04pm|Categories: Equity Market Analysis|Tags: |Comments Off on AAPL Testing Critical Support