Apple Bottoming! Get Ready to Buy

by Sam Collins | July 9, 2013 7:20 am

Apple (AAPL[1]) — On Oct. 9[2], the Trade of the Day stated that from a technical perspective Apple should be sold with a downside target of $605: “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.”

The sell opinion was reiterated on Oct. 26[3] with a target at $587. We recommended covering shorts on Nov. 7[4], near $570. But on Dec. 6[5], we went short again near $529, and continued to recommend shorting on Feb. 28[6], at $440, and April 25[7], on a bounce to $436.

Now, however, it is clear that all shorts should be covered in light of a possible saucer forming. A close above the resistance line at $465 would signal that a long-term bottom has finally been established.

Apple is expected to earn $41.04 in fiscal year (FY) 2013, ended in September, and the consensus earnings estimate for FY 2014 is $43.59. The mean price target has been increased to $538 from $500, and those willing to take a longer-term perspective may buy Apple with a stop-loss order at $390, below the April low.

07 08 13 aapl 300x187 Apple Bottoming! Get Ready to Buy
Click to Enlarge

chart key 300x84 Apple Bottoming! Get Ready to Buy[8]

Endnotes:
  1. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  2. On Oct. 9: http://investorplace.com/2012/10/trade-of-the-day-apple-nasdaq-aapl-6/
  3. on Oct. 26: http://investorplace.com/2012/10/trade-of-the-day-apple-nasdaq-aapl-7/
  4. on Nov. 7: http://investorplace.com/2012/11/trade-of-the-day-apple-nasdaq-aapl-8/
  5. on Dec. 6: http://investorplace.com/2012/12/trade-of-the-day-apple-nasdaq-aapl-9/
  6. on Feb. 28: http://investorplace.com/2013/02/trade-of-the-day-apple-nasdaq-aapl-11/
  7. April 25: http://investorplace.com/2013/04/trade-of-the-day-apple-nasdaq-aapl-12/
  8. [Image]: http://investorplace.com/wp-content/uploads/2013/05/chart-key.gif

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