I wasn’t sure if AAPL would end up closing above 500 this week. But it did in relatively impressive fashion, considering the price action that often occurs around weekly and particularly monthly options expirations. (If you don’t believe in option pin effects, hopefully we’ll just politely agree to disagree.)
Does AAPL’s breaking 500 to end the week portend bullishness on Monday? If you subscribe to the theory that sufficiently high call open interest creates a barrier that’s very difficult for a stock to surmount prior to expiration (which I do), you’ll probably be leaning yes. But leaving OpEx aside (for the most part), do the charts offer any potential clues?
Looking first at the 15-minute chart:
It still looks great to me as far as bullish consolidation is concerned. Since the bullish pennant didn’t resolve today, I just revised the red “guidelines” just to show the narrowing range of price action. To me, it looks net positive in at least three ways. First, you can see the continued commitment to the upper range of the 485-505 post-January-earnings airspace. AAPL never dropped below 498.86, so it was never very far from the psychological 500 level; and really, AAPL traded above 500 most of the day. Second, MACD-h, after being negative for about a day and a half, started fighting its way into positive territory, ending the trading day having flipped once again into positive territory. Third, AAPL appears to be resolving the volatility squeeze quite well – the BB bandwidth is all of about 2.5 points, and AAPL was on the cusp of breaking out of the upper BB at the close.
While it’s true that AAPL hasn’t broken out yet, it certainly hasn’t broken down, and monthly OpEx definitely seemed like a factor to me today. It’s only one amateur blogger-trader’s opinion, but there just isn’t much negative to say from this timeframe. For the moment, and we’ll revisit this at the end of the post.
Moving onto the hourly chart, it’s largely the same story.
AAPL’s price action is coiling, and making higher lows as it goes, showing a remarkable display of momentum/pent-up energy as AAPL bulls continue to push the envelope in the low 500s. The hourly BB bandwidth has narrowed considerably, to about 7.5 points, with AAPL looking quite strong and being within 1.5 points of the top of the range. The one note of potential caution on this timeframe (that’s evident to me, anyway), is the negative MACD-h, although it’s yet to indicate meaningfully falling share price.
Then a look at the daily chart, once again from the “wide-angle” view:
AAPL’s sure made some strides lately, hasn’t it. It’s a struggle to find anything negative to say from this timeframe. AAPL is handling the upper BB very, very well, and the three-day consolidation pattern looks stronger than any previous rest period from the 388 double bottom (the other 2-3 rest areas were descending channels). Just a really nice bull flag. If one insists on looking for “red flags”, there’s AAPL’s overbought readings (which are easily explained by the recent bullish price action, and also readily diminished in present importance due to AAPL remaining in strong uptrend at the moment), and there’s AAPL being extended over the EMA-8 (although it’s rising to meet AAPL, having ended the day at a non-div-adjusted 484ish).
All in all, AAPL looks to be setting up very nicely for a possible upward move sometime in the near future. But how to deal with the higher altitude? As always, the answer to that question has to come from you, the individual market participant, but to me the answer is fairly simple.
If AAPL is strong on Monday, to me it should breakout from the upper red “guideline” and/or the upper BBs on the hourly/15-min timeframes, crossing over the 504ish short-term resistance and making further progress from there, perhaps not even looking back from the 505 “end” of airspace.
As far as the shorter-term at least, AAPL will throw the current “implied” price trend of more upside into considerable doubt if it doesn’t follow through on the bullish signs from the past 2-3 days. Looking below, there’s confluence from the lower red “guideline” and intraday support of around the high 498s that AAPL ideally shouldn’t break if it wants to exhibit the conviction to continue AAPL’s trading higher.
Take nothing for granted, see what the market gives you, and trade with care – not a bad set of principles to have. Hope this week was a good one, and enjoy the weekend.