The broader U.S. stock market staged a notable so called “bullish reversal” on Wednesday. Technology stocks as a sector participated nicely in the bounce, as did shares of Apple Inc. (NASDAQ:AAPL). Of course given AAPL stock’s gigantic market capitalization one could say that without it participating it would more challenging for tech stocks to rally.
Nevertheless, the price action on April 4 is one that active investors and traders can respect for a potential bounce trade.
As a point of reference and so you know, when I last offered my take on AAPL stock on Feb. 27 I said that “from a trading perspective the reward to risk on the long side is now notably worse than it was in early February.” Over the ensuing weeks, the stock gyrated and retraced lower by about 8%.
Apple Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
The multiyear weekly chart of AAPL stock shows that the stock is still holding on to its most recent up-trend (marked by the blue parallels) as well as its yellow 50-week simple moving average. To no great surprise the chart of the Nasdaq 100 looks very similar … given this stock’s large part of the index.
With Wednesday’s price movement the stock is once again giving hope to trend followers that a rally off the bottom of the up-trending channel will move the stock back to the upper end of the channel. For my part, I am not ready to call a move back higher above $180 to be in the cards, but a tradeable bounce looks good.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
On the daily chart, we see the bullish outside reversal day more clearly. Here we see that sellers on Wednesday morning attempted to push AAPL stock below the previous days’ lows. Buyers, however, quickly stepped in so much that by day’s end the stock had rallied about 4% off the intraday lows and saw the stock close the day at the very upper end of the multiday trading range. I might add that this rally is occurring right near the stock’s red 200-day simple moving average.
From here, active investors and traders could try a long-side stab in AAPL stock with a first upside target around $178 and a stop loss at $167, for a swing trade.
Check out Anthony Mirhaydari’s Daily Market Outlook for April 5.
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