$AAPL Chart Checkup, 05/27/14 Market Close: “Unfamiliar” Territory

625 and change. Another strong move, on “above-average” volume of around 12M. Wow. What the heck to do now?

If you’re an buy-and-hold AAPL shareholder who bought somewhere south of 600, you might say: “I don’t see a problem here.”

If you’re a trader with a strong opinion: Well, that question obviously isn’t for those already with strong opinions, bullish, bearish or neither. Why are you reading this, anyway? 😉

If you’re a trading-type or someone with AAPL trades just trying to make sense of the monster run from 511 or 524ish or whatever pre-earnings measuring point, you might say: “Tread carefully?” (Seems quite sensible.)

Who knows where AAPL will end up short-term, particularly given the WWDC and 7-for-1 share split Trials of Sentiment™ right around the corner. But if the charts have provided some indirect sort of hints recently…maybe there’s still something of potential use in them now?

Couldn’t hurt to check, right? (Note: Maybe it’s just me but often seems technicals can be “outweighed” by events, so charts might not be “instructive” as we get closer to these events.)

(Tap or click the chart for the full-size version.)

5-min chart:

aapl-5min-052714close

– It’s like one bull flag to another these days. This particular flag might even be right above a geothermal vent or something.

– If we’re to assume AAPL formed another micro bull flag over the course of at least a few hours or so? Late Friday to today formation…trigger either late morning or mid-day…8-9 point measured move…target of high 620s to about 630?

– Now, AAPL’s moves have been “methodical”, but the velocity has been anything but deliberate lately. The winning streak could well continue, but it will end at some point, and no one can predict how that AAPL down day or run of down days will play out. Far be it from me to tell anyone how to trade – but I do want to “make clear” that I’m fully aware that charts can be as fickle as they can be consistent. Heck, from 705, AAPL was remarkably consistent in a distinctly non-bull-friendly direction.

– That said, if you remain in the bullish camp on a micro-timeframe scale – there do appear to be reference levels and technical indicators to keep track of, should you choose to continue “riding the wave”. The Bollinger Bands are implying a micro price resolution soon (with AAPL hammering off the EMA-13, close to mid-channel, with the final 5-minute candle), with oscillators and MACD-h (though slightly negative) looking net bullish as trading ended today. We’ll see what happens in the first hour or two tomorrow.

Hourly chart:

aapl-hourly-052714close

– Strong price action out of the volatility compression phase, and MACD-h/oscillators followed.

– Potential negatives? “At some point”, you’d think AAPL would re-test a moving average or two. Bollinger bandwidth is higher than normal, at around 30 points. Oscillators didn’t cool off as much as recently, so AAPL could be considered overbought as well as overextended.

– Then again, AAPL isn’t flying outside the Bollinger Bands on this timeframe, and AAPL’s performance out of the late-April-to-mid-May bull flag does “open up” the possibility of still higher bullish price targets.

– Deliberate move or overheated? We may not get a better idea for a while yet.

Daily chart:

aapl-daily-052714close

– If I’m reading it right, AAPL just put in the third-strongest green day (open-to-closing-price basis) since the 20+ point move on April 28.

– In some ways the price action looks a at least a little frothy (if you so interpret the mostly-bullish oscillator readings since around May, plus AAPL’s around 8 points above the upper Bollinger Band on this timeframe).

– Though in other ways, looks like a new uptrend is just getting started (MACD-h only positive for the second day, AAPL handling yet another recent volatility compression scenario to the upside with aplomb)

– “From this distance” a case can be made for a bull flag trigger of 70ish points or more from whatever the breakout level is, albeit with a much shorter consolidation period than recently. With a move of around 30-40 points since the trigger, so far, so good…so far.

– There is a small price gap around 615. Can AAPL “defend it” in the short term?

Wrapping up with the 2-day chart:

aapl-2day-052714close

– Is that a massive cup-and-handle-ish trigger from the April earnings announcement? On a more macro level, the 190-or-so point measured move off the 388-ish double bottom can’t be ruled out either.

– AAPL looks to be undergoing massive range expansion on the 2-day timeframe. While AAPL’s elevator-esque move can’t continue forever, there also isn’t anything “inherently wrong” with a power move, after months of clawing its way back from sub-400, to retake a multi-year macro trendline. If AAPL is indeed “reverting to the mean” in that sense, the trendline will act as support rather than a barrier.

– AAPL’s not too far away from 644, which in April 2012 proved to be strong resistance. AAPL looks to be on a much more sustainable path than back then, but I’m sure bulls and bears alike are watching that general vicinity very closely.

Not like it’s much to go on, but pundits/media and Wall Street haven’t been all that bullish immediately following a WWDC in the past two years. WWDC 2012 brought a 9-point drop from the prior close (though AAPL continued to make higher lows after that point in choppy trading through late July), and WWDC 2013 saw AAPL close red and drop another 50 points over about two trading weeks until the June 28, 2013 double bottom that officially kicked off the uptrend AAPL is still in as of now.

Will AAPL’s newfound momentum allow it to remain strong through the next two major events between now and June 9? Or is AAPL “overdue” for at least some retrace, which wouldn’t be a bad thing either?

See you on the virtual trading floor tomorrow.

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