Apple Stock: Why the Bears Are Salivating (AAPL)

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Apple Inc. (NASDAQ:AAPL) is set to announce their quarterly results today after the bell. For many, this is considered to be the “lame duck” quarter for Apple Inc. Traders and investors follow the company’s spring and fall earnings reports for signs of new products and innovations that historically give a boost to Apple stock.

Unfortunately, innovation has been on the thin side for AAPL of late, as the company has come out with iterations of previous products instead of real innovations. This has Apple stock treading water, as Tim Cook & Co. haven’t been able to squeeze additional profits from its operations.

The results of this fundamental quagmire: Apple stock is trading much more off its technical trendlines — something we pointed out in January when we forecast shares were likely to decline from $120 toward $80. Of course, we got called out quite a bit by AAPL bulls, but as they say, the chart rarely lies.

Speaking of which …

Apple Stock Charts

As we head into the earnings report, the charts are sending a clear signal to AAPL stock holders. This quarter, lame duck or not, is a make-or-break event. That’s because of a tightening technical pattern that has overhead resistance pressing Apple shares toward key support.

Apple stock chart 1

The support comes from a few trendlines. First, there’s the 50-day moving average for Apple stock, which currently sits just under current prices at $97. Right under this mark is AAPL’s last short-term chance at support with the $92 level, which held the stock at bay in May and June.

In addition to the May and June bottoms, Apple’s 50-month moving average lies at — you guessed it — $92! A break below this mark would be the first since 2008 for the technology giant.

Apple stock chart 2

Breaks below these two support level will turn the stock over to the bears over the intermediate-term and target a move to $80.

What’s Next for AAPL?

On the upside, there is some room for Apple stock to move higher, but it will take a lot of work. First, AAPL has to combat the declining trendline that connects its lower highs since the stock rolled over in late 2015. This trendline draws resistance at $100, which would also provide additional resistance due to its round-numbered nature.

Second, shares have additional resistance at $103 from their declining 200-day MA. This is the trendline that held shares from rallying higher in April and ultimately resulted in a correction back to $92 after the companies last earnings report.

Summarizing this squeeze play, the bulls have got a lot working against them given that the expectations are for a lame-duck report. Apple stock needs a jump start right now to avoid the technical squeeze play that would result in yet another correction. In short, AAPL needs “the next big thing” this afternoon to avoid falling deeper into “value” territory — which sometimes is just another word for a bearish stock.

As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/07/apple-stock-aapl-bears/.

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