Apple’s price action warned us that the company was more than likely not going to recover its 52 week high at $575 as I outlined for subscribers on 1/5, “The Apple short continues to be a great trade, adhering to all kinds of technical sell signals”.
The chart below is one of many we provided to our subscribers throughout the last two months, helping explain why technically investors and traders were going to continue selling into Apple’s $575 price level. The technicals showed us that investors were bailing on Apple as it reached key resistance levels. (Some investors were “pumping and dumping” but never mind that.)
Utilizing technical analysis to decipher what investors were really doing helped us suggest multiple times shorting Apple’s stock as it rallied toward $575 (shown by the blue down arrows when we initiated sell suggestions in our twice weekly published Technical Forecast).
Those that followed the advice are now up over 10% as Apple fell 8% on its “lowered projections” earnings announcement 1/27/14.
Furthermore, bullish sentiment was sky high Apple heading into the end of 2013. Combine this with other technical indicators showing buyers were disappearing and $575 proved formidable resistance. (For more on my timestamped Apple short trade, see the video post published two weeks ago on 1/14/14 at ETFguide’s YouTube channel, titled Apple – A Great 2014 Short Setup )
Apple has now reached our first price target zone, an area where buyers and sellers decided that between $500 and $520 was a fair price for Apple back in October and November.
With Apple’s price now approaching $500 this means that everyone who bought shares since October is now losing money and may be looking to salvage positions. That means bounces likely will be sold. A break of key support at $500 will unlock further selling, likely back to the August and September consolidation range around $480 where I will continue to follow the technical setup to help warn of any further downside.
ETFguide utilizes technical and sentiment analysis to help decipher the key trends in the markets. These strategies helped us to pinpoint Apple’s top, along with actionable trades to take advantage of a trend that became a bonanza for prudent investors who were ready.
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