$AAPL Chart Week in Review – A Stock in Search of Traction (06/13/14 Market Close)

The company seems more than fine, it’s just the stock that might be a near-term concern for bulls.

At the end of the week, AAPL’s Second Trial of Sentiment™ this summer – the 7-for-1 share split – didn’t go as well as the first (WWDC). The red weekly candle says it all.

An overextended rally? Profit-taking? Geopolitical instability in the Middle East? EU wanting more taxes from Apple? Who knows, but for whatever it’s worth, there’s always price action and charts in the never-ending search for fragments of clues.

(Click for full resolution charts)

5-min chart:

aapl-5min-061314close

– First step on AAPL’s road to recovery – break out of this apparent descending channel. Yes, sideways or even slightly upward trading in the short-term wouldn’t change the short-term bearish read – since that’s the second half of a bear flag theory – but it beats the generally linear selloff over the past two and a half days or so.

– From this timeframe, as mentioned in a previous post, one could make the case for a bear flag measured move target of around 90 or so, just a point of reference for next week.

– Should AAPL bounce in the near-term, there’s 91.75-ish as a point of reference, and of course Ye Olde Resistance at around 92. I’m sure short-term AAPL skeptics, those just looking to hedge, etc. would be on the lookout for a relatively feeble bounce and a “second chance” for a head and shoulders “confirmation” of micro weakness. Reclaiming and holding the high 93s could be a bullish objective for later.

Hourly chart:

aapl-hourly-061314close

(Apologies for that descending channel not looking right – my charting platform doesn’t handle trendlines as well when zooming out from shorter timeframes.)

– Yep, definitely a first this post-April-earnings uptrend. Again, I understand it’s only one indicator on one timeframe, but it’s still unique – definitive volatility compression to the downside with accompanying range expansion per Bollinger Bands. AAPL will inevitably retest mid-channel – it’ll be interesting to see how it trades once it gets back in range.

– The few indicators I track (MACD-h, oscillators) are pointing bearish/oversold, though in a strong countertrend, this condition could persist for a while. It might, it might not. We’ll just have to wait and see what happens.

– There’s a bit of confluence between my Fibonacci retracement measurement (38.2% retrace level of sub-move from 82.93 to 95.05) and the 90-90.50 reference zone. Below that, looks like 89 would be an important level for AAPL to hold to try and regain momentum (which also corresponds to the 50% retrace level).

Daily chart:

aapl-daily-061314close

– Three down days in a row isn’t uncommon, nor are four consecutive days in the red; as I’ve pointed out before, five down days in a row would be a significant change this uptrend. Why? It’s never happened since AAPL’s definitive bounce from the high 388-ish (pre-split) double bottom. Something I’m keeping an eye on.

– Remains to be see if AAPL’s MACD-h negative crossover on the daily chart “portends” additional follow-through to the downside, or something more like consolidation. It’s a lagging indicator, but one I do find useful from time to time – you may of course think differently for good reason.

– More liquidity than ever on account of the share split, but volume is on the low side by AAPL standards – with Friday’s regular session volume (~52M shares) below the recent average of about 70M shares per Google Finance and Yahoo! Finance (which sounds about right per my own observations).

– Downside velocity is also something I’m keeping an eye on. Granted, AAPL has had a huge move post-earnings, more than double the previous, slower, “more controlled” upwaves.

Weekly chart:

aapl-weekly-061314close

– Overall, AAPL’s sub-uptrend post-earnings remains just fine, although the toppy-looking candle it just put in on the weekly chart is something that shouldn’t be ignored at the very least. (Sorry about all the clutter.)

– As a buy-and-holder, as always you’re probably wondering what the fuss is about. And really, it’s not too surprising to see AAPL go flying at such an impressive angle of ascent for weeks and finally find resistance in a combination “contested price zone”/”upper half” of a macro price channel that contained much of AAPL’s price action before, well, February 2012 – May 2014 happened.

– The longer-term “bullish case litmus test” I brought up a little while back – whether AAPL can net reclaim the mega-macro trendline. For now, AAPL’s proven up to that task – will it continue to be until the iPhone 6 news cycle kicks into high gear?

– Of course, if AAPL makes it to, say 120 somewhere down the road and consolidates its way out of the mega-macro trendline, could be a different thing.

Have a great weekend everybody, and I’ll see you on the virtual exchange floor Monday.

 

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