AAPL Chart Exhibiting a Classic Breakdown

Apple broke through neckline of head-and-shoulders on breakaway gap

   
AAPL Chart Exhibiting a Classic Breakdown

Apple (NASDAQ:AAPL) — On Oct. 3, we reviewed the possible future direction of AAPL:

1. The support holds, and the support line and 50-day moving averages are buy points with the stock eventually working its way higher.

2. The stock holds as noted and trades sideways, between $655 and $680, for up to several months before either falling through the support line, turning the line into a neckline of a head-and-shoulders top, or resuming its upward trend.

3. The stock resumes its near-term downtrend, closes under $652, and thus confirms an immediate head-and-shoulders breakdown with a target of about $605.

On Monday, the third option, a head-and-shoulders breakdown, occurred following more production problems with the new iPhone 5. Despite reduced trading volume due to Columbus Day, enough sellers surfaced to drive the stock’s price through the neckline at $655 on a breakaway gap.

This is a classic breakdown — it just doesn’t get any clearer than this. However, a fall to $605 would not change the long-term direction of the stock (which is still up) and could present a good buying opportunity. I’ll review it when it gets there.

10 09 12 aapl 300x213 AAPL Chart Exhibiting a Classic Breakdown
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chart key 300x84 AAPL Chart Exhibiting a Classic Breakdown


Article printed from InvestorPlace Media, http://investorplace.com/2012/10/trade-of-the-day-apple-nasdaq-aapl-6/.

©2014 InvestorPlace Media, LLC

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