It has now been two weeks since Apple (AAPL) announced its latest lineup of iPhones and unveiled the Apple Watch. Apple stock since then has mostly consolidated in a sideways fashion, but Tuesday’s 1.56% uptick looks to be setting AAPL up for its next leg higher.
On Sept. 10, the day after Apple’s new product announcements, I penned my take on Apple stock, including the bull and bear cases and some levels around which risk could be managed. Specifically, to the bulls, I said:
“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.”
Since the product launch, most of the news-flow around AAPL has focused on sales numbers, which hit new records for a post-product launch for the company. In recent days, some issues around the “bendability” of the iPhone 6 Plus have come up, but thus far this has not weighed on the stock price.
Apple Stock Charts
Looking at the multiyear weekly chart of Apple stock, note that the breakout move in April pushed AAPL back to its all-time highs from September 2012 by August. The stock even marginally surpassed those highs and recorded fresh all-time highs, but considering the major level it has reached, some consolidation was in order.
Additionally, the new product launch also needed to be digested, thus the consolidation phase that Apple stock went through over the past few weeks is constructive in nature.
On the daily chart, the breakaway gap from April 24 ignited a new major leg up, which technically remains in play. Apple stock has since held support at its rising 50-day simple moving average (yellow line). On Sept. 9 (launch day), the stock gyrated wildly intraday but only managed to close lower by a small margin. The following day, AAPL rallied higher again, leaving a bullish outside day behind on the daily chart. On Tuesday, Apple stock moved up by 1.56% in another bullish outside day, and now shares stand a good chance of breaking through recent highs around $103.75.
Furthermore, the entire price action since at least early September has formed a bullish flag pattern, which would resolve higher on a break above the $103 area.
Active investors can use this current constructive setup in Apple stock to get long on a breakout of the aforementioned bullish flag pattern for a move toward $108-$110.
For risk management purposes (as that’s what this game is all about), any break below $100.50 would negate the current setup.
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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.
