Apple: Positive Posture, but Overbought

Don't chase AAPL here; just wait for the green light


Back on April 25, I opined that Apple (NASDAQ:AAPL) was trading in a rather lackluster fashion. I went on to say that if I were to get interested in being long in Apple again, AAPL would have to trade above its 50-day simple moving average, which at the time came in around the $430 mark.

Since I wrote those words, the stock has staged a significant rally to the tune of 57 points, or around 14%. In full disclosure, I traded the stock to the long side when my signal flashed; however, I have since taken full profits and am now scouring the charts for the next trade setup.

Here’s what I see:

First-up, the longer-term chart looking back to the summer of 2011 gives us some perspective as to the level where Apple recently found a “bottom.” The July 2011-January 2012 period served as basing time for AAPL; also in this important trading range is the area from which the stock recently bounced. This area remains important if and when Apple ever heads down there again.

AAPLmultiyear Apple: Positive Posture, but Overbought

On the closer-up daily chart of Apple, note that the stock has now bumped into its downtrending 100-day simple moving average (blue line) near $463. While the stock is immediate-term overbought, the break of the September 2012 downtrend puts the stock into a positive formation that should lead to further gains in coming months.

I am not looking to chase the stock higher here, but a break above $466 should lead to a first target at $485, followed by $510-$514, which would fill the earnings down-gap from Jan. 24 (blue shaded area).

AAPLdaily Apple: Positive Posture, but Overbought

Last but not least, for those wanting a real close-up look of the stock, here is a five-minute-interval chart looking back several trading days. The white horizontal lines serve as interesting areas of support, as does the 200-period moving average (blue line). Shorter-term traders can use these reference areas to base trade against.

AAPL5minute Apple: Positive Posture, but Overbought

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter here.

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