AAPLTalk, 10/16/13 Market Close: Building the Bull Case During a Wait-and-See Interval

It…er…looks like the US government shutdown and debt ceiling cans will be kicked down the road until around at least mid-December (that’s the budget conference committee deadline to supposedly stop kicking the can down the road).  The final votes will hopefully be in by the end of the day, but the markets counted the proverbial chickens early, and responded with considerable enthusiasm.

AAPL, as you might expect…didn’t exactly trade with the market.  Big surprise, huh.  If I had to guess, I’d say it’s partly because three NEW Trials of Sentiment await:

1) the Oct. 22 media event

2) Oct. 28 earnings release

3) the launch of Apple’s holiday 2013 iPad lineup (and maybe initial sales numbers), maybe due sometime in November.

Yes, there’s always weekly options in play, but since WS is obviously still skeptical of Apple in general (the way-below-SPX market multiple doesn’t lie)…Apple still has to jump through a series of flaming hoops to improve sentiment in the stock.   Same as it’s been the past many months.

While AAPL didn’t have a banner day relative to the market, it still made what I consider to be meaningful progress in building the bull case from a technical perspective.  Time for a quick look at the charts.

Hourly chart:


– Day 2 of the bull flag breakout, and a close over 500 as a bonus.  Confidence in the breakout grows the closer AAPL gets to 513-ish, of course.  AAPL couldn’t quite get past 502-ish today.  The nearby levels I mentioned yesterday (492-497ish / 502ish / 507ish / 510ish) all still seem to be in play.

– MACD-h actually crossed negative on the hourly, but price stayed stable and Williams oscillator still reads very bullish (although AAPL traded in a range of all of 3.3 points today – talk about narrow!)

– From this timeframe, it looks like a micro bull flag may be forming with the previous two days acting as the flag element.  We’ll see whether AAPL cools off, consolidates or makes a move.  My “just for fun” guess is AAPL will struggle getting much past 500 this week if at all, but that wouldn’t necessarily be a bad thing, not if AAPL takes a breather before attempting a new move higher.

Daily chart:


– Today’s candle:  Pretty much a doji, but with a small bias to the upside rather than representing pure indecision.  A much better candle than Sep. 10, that’s for sure.

– MACD-h, Williams oscillator look bullish, and AAPL is close to 10 points over the EMA-8.

– Does anyone remember the last time AAPL strung together six straight winning sessions, let alone five?

– Of course, that plus the EMA-8 “catching up” to AAPL, plus the fact that AAPL had a small gap up today, might make even AAPL bulls wonder whether AAPL is due for some retrace.  But this is hardly the kind of insane momo action we see in stocks like, say, NFLX, AMZN, and TSLA.  It’s been a relatively spirited move, yes, but only of around 15 points if you measure from the Oct. 9 market open, and about 25 points if you count the Oct. 9 intraday low.  5% upside in 6 trading days doesn’t really scream “parabolic”.  And you do need an upward move for bull flags and inverted head and shoulders to trigger, after all.  But I can see where it might be more sustainable for AAPL to take a quick break or test/establish support soon.  Who knows what’ll happen on Thursday and Friday.

It’s good to finally have a big source of market uncertainty behind us…or should I say, punted a few months ahead of us.  Well, at least the market will be better able to “trade on its own merits”, whatever that means these days.  See you on the trading floor tomorrow.

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