Attention Traders: If Apple Hits This Level, Sell!

by Sam Collins | February 28, 2013 1:10 am

Apple (NASDAQ:AAPL[1]) — Earnings growth has been spectacular, averaging 72% in the past five years. However, sales growth is expected to fall to 14% for fiscal year (FY) 2013 compared with a 45% rise in FY 2012, and the growth estimate for FY 2014 is again just 14%.

The stock had a spectacular run last year, up more than 70%, to a high of over $700 from $405. But after September’s high, the stock suffered a violent reversal into a bear market, and every attempt to break the bear market’s resistance line has failed.

The latest rally resulted in closing a bearish continuation gap at $485, after which it again turned away from the major resistance line and consolidated with a new support line at $440. But the consolidation has taken the form of a head-and-shoulders, and a break below the neckline at $440 would target a further decline to under $400.

Sell AAPL short on a break of the neckline at $440. Selling short is a speculative technique that is not suitable for every investor. Use a stop-loss to protect against potentially unlimited losses. And check with your broker for any special margin requirements and the ability to borrow shares.

02 28 13 aapl 300x203 Attention Traders: If Apple Hits This Level, Sell!
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chart key 300x84 Attention Traders: If Apple Hits This Level, Sell!

Note: The Trade of the Day has been consistently bearish on AAPL since Oct. 9[2], when we suggested a short sale at $638. The most recent short-selling recommendation was on Dec. 17[3], at $510, when we adjusted a prior downside target of $500 to $450.

  1. AAPL:
  2. since Oct. 9:
  3. on Dec. 17:

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