AAPL Stock: A Clearer Picture Is Emerging

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On Tuesday, Apple (AAPL) finally released a new batch of iPhones and unveiled its much anticipated Apple Watch. AAPL stock initially rallied on the news, but as the presentation went on, the giddiness subsided and the stock closed marginally lower on the day.

beat the bellActive investors can now use either side of Tuesday’s intraday trading range to look for the next trade setup in AAPL.

An Apple smartwatch has been anticipated for so long that through the lens of a trader, AAPL stock only could have traded lower once the news set in (and it did). We call this phenomenon “buying the rumor and selling the news,” and it’s a time-tested strategy that many market participants have heard of but few actually manage to profitably apply.

While many analysts in recent weeks speculated what the Apple Watch could look like and modeled sales forecasts two years out, I focused on the price action in the stock and began seeing some troubling signs — at least as far as the near-term prospects for AAPL stock is concerned.

AAPL Stock Charts

After a steady and almost surreal sturdy incline off the early August lows, AAPL stock on Sept. 3 dropped more than 4% on the day, and by so doing also marked its weekly chart with a bearish move. Specifically, last week’s price action was enough to form a so-called outside week, or bearish engulfing candle, where the price action fully engulfed that of the previous week.

This type of selling ahead a major product announcement for Apple was enough to make me sit up in my chair and take notice.

This move also took place right as the stock marginally surpassed its previous all-time highs from September 2012 and actually constituted a breakout fake-out move. While AAPL stock is well-positioned to move higher in the bigger picture, through a multiweek/multimonth lens, Apple now looks to have a good amount of resistance to overcome, with plenty of room to the downside for a mean-reversion or consolidation move.

AAPL stock chart weekly
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On the daily chart, note that Tuesday’s failed intraday rally marked the daily chart with a weak-looking candle. AAPL stock closed the day right above its 50-day simple moving average (yellow line), which coincides with the lower end of the uptrending channel that has formed since April. Should Apple stock now break below this area, the next support areas to look for are the 100- and 200-day moving averages (blue and red lines, respectively).

AAPL stock chart daily
Click to Enlarge

Active investors can thus now either short AAPL stock on any break of these moving averages, while those looking to buy should be on the lookout for any bullish reversals around these moving averages.

Alternatively, if yesterday’s weakness in AAPL stock was just a fake-out move, and if the stock in coming days manages to close back above Tuesday’s intraday high near $103, then a long-side trade would set up with an initial price target of $110.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/09/aapl-stock-apple-charts-iphone-6/.

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