Trade of the Day: No Rush to Buy Apple Inc. (AAPL) Stock

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Shares of Apple Inc. (NASDAQ:AAPL), while still higher by 32% year-to-date, are looking increasingly perilous, at least for the near-term. My multi-time-frame analysis below outlines the stock’s overbought readings on the longer dated charts, coupled with teetering on the next critical line of technical support. At the very least, there is no rush to buy AAPL stock right here, right now.

Trade of the Day: No Rush to Buy Apple Inc. (AAPL) Stock

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For some perspective and reference, when I last mused about AAPL stock in this column on Sept. 6, I offered that the $160 area is the level to watch and should it be broken then a next downside target becomes $154, followed by $150. Since then, my $154 downside price target has been reached and the stock is on its way toward $150, and likely lower still.

One important note at this juncture is that AAPL stock tends to move sideways-to-lower in the two to three months following major product announcements such as the ones just launched on Sept. 12.

Away from the charts, this is just one more reason why, for the near term, the stock does in my eye not need to be bought.

AAPL Stock Charts


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Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week

Moving on to the charts, the multiyear weekly look reveals that the steep 2017 rally by late August had propelled AAPL stock right back to the very upper end of its longer-standing up-trending channel. Note that momentum as represented by the MACD momentum oscillator at the bottom of the chart topped out in May, and that the last-hurray rally into August came on a lower high in momentum, i.e. on less upside momentum. This so-called negative divergence is another sign that AAPL stock may now be in need of a mean-reversion move lower.

How far could AAPL stock fall through this lens you ask? The yellow 50-week simple moving average has offered good support and resistance in the past and could be a level of attraction. This moving average currently sits near $137.


Click to Enlarge

Moving averages legend: red – 200-day, blue – 100-day, yellow – 50-day

On the daily chart, we see that as a result of the past two weeks of weakness AAPL stock now sits right on a the green-dotted diagonal support line, which also coincides with its blue 100 day simple moving average. Barring a sudden and immediate strong bullish reversal from here, the path of least resistance points lower and toward the red 200-day simple moving average in the low $140s.

Traders and active investors could consider lightening up on medium-term long positions in AAPL stock or buying puts or put spreads with November or December expiration to profit from further weakness in the stock in the near-term.

Check out Anthony Mirhaydari’s Daily Market Outlook for Sept. 22.

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