That’s my not-the-least-bit-actionable, DYODD working theory.
Before a somewhat closer look at the charts, that is.
Let’s “fire up the grill” (obligatory 3-day weekend reference, even if it doesn’t make much sense in this context 😀 ) and see if the fragments of clues in a few timeframes tend to support or reject that silly little theory of mine.
(Click for full resolution charts)
5-min chart:
– Ladies and gentlemen of the jury…does this look like the face of an overheated micro uptrend? 😀 (I’ll be here all week.)
– I’m just a humble home gamer, but to me? It’s a fairly clean bull flag and very nice Friday afternoon resolution to the upside following 3-4 days of highly constructive consolidation-type price action. If you want to call it a pennant-type continuation, I guess you could do that too. Either way, bullish, with very little bearishness in sight. And hey, no one said bull flags have to be model descending channels or something, right? They could also fly high and proud…you know, like actual flags supported by a strong wind.
– A potential point of contention – where to measure the measured move? Again, it’s more suggestion than assurance, but the measuring point does make some difference. The move itself isn’t so hard to measure – 586-605 doesn’t seem too controversial, so almost 20 points. Breakout from wedge? That’s a starting point of 605. Kinda-sorta micro-timeframe “double bottom” on May 20th? OK then, that’s 601.
– Whatever the case, the micro-timeframe measured move suggests a target of around 620-625ish. And you know what, AAPL isn’t quite there yet. The oscillators I track (“normal” Stochastics and Williams %R) are “revving up” once again and showing continued bullishness into the close.
– AAPL bulls would probably argue that AAPL did particularly well today considering the sleepy trading you’d expect from half-empty trading firms with one foot out the door to the 3-day weekend (meaning that the other half of market participants have some “catching up” to do come Tuesday, particularly those that may currently be in short positions).
– On the other hand, there’s always things going on in the world, you never know what the market will “choose” to react to, and three days off might cool off AAPL’s momentum. That’s why I usually look at multiple timeframes – to see if there’s a bearish read I might have missed.
Hourly chart:
– …huh. No counter-balancing bearishness to be found here. (Though if any of you see a bearish read, you know how to let me know!)
– Yep, looks like AAPL is only just beginning to resolve to the upside. After the hourly Bollinger Bands compressed to about 5 points on May 21, AAPL never meaningfully broke below mid-channel (only for one hour, and even then not really, considering the hammer bounce). It’s been nothing but near-textbook range expansion since then. Even now, Bollinger bandwidth is about 10 points…which isn’t exactly a big range.
– AAPL “no longer fears” the mega-macro trendline. Something of a test on Tuesday…then some separation, especially on Friday.
– MACD-h went positive with 3 hours to go on Friday, with the oscillators also picking up steam.
– Notice how the hourly chart looks similar to the 5-min chart bull-flag wise? With, yes, another fairly clean breakout to the upside, whether you try and fit the price action to a channel or just go with AAPL decisively breaking above 600/604/607. If you measure from 561, that’s a decent-sized measured move, easily over 30 points in my humble opinion. But if you measure from around 525…?
– Better jump to another timeframe, the technical read seems too bullish to be right…
Daily chart:
Dang it. Well, always best to be on the lookout for potential changes in composure if you can. Even if they’re tough to spot…on…multiple…timeframes.
– Another volatility compression scenario based on Bollinger Bands, huh? AAPL looked like it was in “pole position” in the middle of the day, by which I mean it was in ideal position to resolve to the upside, “if the market would allow it”. A few hours later? AAPL basically “conquered” OpEx Friday, sailing comfortably over 610 and continuing to show strong megacap leadership. And by the way, now AAPL is showing early breakout signs to the upside based on said Bollinger Bands. Which, at bandwidth of slightly over 29 points, is actually a bit narrower than the 31 point bandwidth on April 23.
– The assumption, in my opinion, has to be continued uptrend at least until AAPL breaks below a moving average or key trendline. AAPL hasn’t seen the SMA-20 ever since earnings. Best of luck to you if you’re taking a contrarian position, and of course it’s possible to generate alpha in many different ways depending on timeframe…but it’s hard for me to see a bearish read as anything but contrarian.
– Yes, daily MACD-h finally made its way into positive territory (non-div-adjusted chart) on Friday, with the oscillators having been in bullish territory for a few days.
– “Overbought territory, you mean?” Well, to say that might (though it’s just my opinion) ignore the multi-month context of AAPL’s rally from 385. As I’ve posted, AAPL is currently in the middle of a very different kind of uptrend. Sure, AAPL had a 4-day dip from the 604 “temporary high” on May 6, but 4% lower in 4 days from trend highs isn’t exactly catastrophic (look at AMZN, YELP, TSLA, etc.), and in retrospect it looks much more like a descending channel/rest period for AAPL to gain still more momentum.
– Note also AAPL’s superior composure around the mega-macro trendline. 5 straight up days with market closes all above that trendline. That’s unprecedented in this intermediate/macro uptrend off the 380s.
– Once again, the read on this timeframe seems to net out…really quite bullish.
Wrapping up with the weekly chart:
– More of the same. Maybe it’s just me, but the same six words from last week’s post still apply: “Strong, strong, all kinds of strong.” If you look back a few years…maybe it’s not even that, as much as it’s a return to macro trend normalcy:
In conclusion, “everything is awesome”? Could be too glib, but for now…mostly yes. But again, that’s “for now”, in case you were wondering if I’ve got the bullish blinders glued to my face. 😛 Keep in mind, I started this blog in late June…when AAPL was under 400. I didn’t start this home game “venture” because I was all that bullish on AAPL stock. 😛 And yes, the 3-day weekend is akin to halftime in sports terms…so there’s theoretically time for bears to make adjustments and “attack” the triumphant-feeling bulls right out of the gate on Tuesday.
On the other hand, a macro trendline is a macro trendline. And AAPL has traded more constructively than parabolically since its post-earnings move. The bears’ best chance to slow AAPL down was two weeks ago – and the shooting-star-looking weekly candle was basically negated by the two green weekly candles that followed (we’re at new trend highs, after all). Apple’s fundamental picture was never really all that bad, its valuation isn’t exactly ridiculous (at around 14.7 vs. the S&P multiple of…18), and management has pulled out all the stops – billions in dividends, $90B worth of buyback authorization, 7-for-1 share split, and expressions of confidence to back up the better-than-expected fiscal Q2 results – in support of AAPL stock. And hey, Uncle Carl likes it too.
Will that translate to a green, holiday-shortened week? Until then, enjoy the extra day off – I’ll see you on the virtual trading floor Tuesday.
The AAPL Tree 
I like it! Thanks for the post!
Appreciate it!
Keep up the good work
Thanks.