Trade of the Day: The Crucial Multi-Time-Frame Look at Apple Inc.

Shares of Apple Inc. (NASDAQ:AAPL) fell another 2.50% on Monday February 5th along with the broader stock market and thus continued a multi-day slide. Although AAPL stock in the near term is reaching some potential support areas worth respecting, in the bigger picture more downside through multi-week/month lens cannot be ruled out.

Trade of the Day: The Crucial Multi-Time-Frame Look at Apple Inc.

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When I gave my take on AAPL stock last week Feb. 2 immediately following the company’s latest earnings report, I said that while the stock is a solid longer-term bet, in the near-term it is no buy until it breaks out of its trading range to the upside, or falls plenty lower.

Many active investors and traders in AAPL stock in particular are extremely near sighted and merely follow the tick by tick in conjunction with news headline flow with complete disregard as to the bigger picture.

AAPL Stock Charts

Click to Enlarge

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

If we take a step back from the daily fray and look at this stock through a multiyear lens with weekly increments (bars) we note that over the past couple of months this stock had reached the very upper end of its longer-standing up-trend. From this angle the pullback of recent days has merely pushed the stock off this upper end and to the yellow 50-week simple moving average. While a bounce or even a low could occur here, the lower end of the rising trend resides notably lower, near the $140 mark currently … or another 10%-plus lower.

The stock does not have to fall down to those levels to become a better buy again, but according to the charts, those levels absolutely cannot be ruled out.


Click to Enlarge

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

So you know, on Feb. 2 I wrote that should AAPL stock fail at its blue 100-day moving average then ‘the next downside target area would likely become the red 200-day simple moving average.’ And indeed on Monday February 5th the red 200 day moving average has been reached and even marginally breached.

This current  juncture in the mid $150’s brings the 200-day moving average in line with a simple up-trend line from the summer of 2016. Note that the daily MACD momentum oscillator (bottom of chart) finally reached oversold levels last seen in May 2016.

Given the daily chart active investors and traders could try to play for a bounce here and ‘test’ the stock for  a bounce back up to the mid to high $160s.  More intermediate term players would want to wait for a stabilizing and ultimately a bullish reversal to take place on the weekly chart before buying again.

Check out Anthony Mirhaydari’s Daily Market Outlook for Feb. 6.

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