Since my last update on Apple Inc (AAPL) on March 5th (http://investorplace.com/2013/03/watch-apples-chart-for-bounceability/), the stock has more or less done nothing. Yet there is something to be read out of this lack of movement none the less.
On the simple daily chart looking back to the stock’s all-time highs of roughly $705 on September 21 2012, the down-trend still sits firmly in place, marked by a straight and simple line (blue) and reinforced by the 50 day simple moving average. From that point of view it is also important to note that the stock has now fully retraced its entire January – September 2012 vertical rally and thus now rests in a more neutral zone with potentially less emotion-driven, slap-happy traders involved in the name.
Last week I mentioned that I would be looking for the following two points to initiate a potential long swing trading position in Apple Inc (AAPL);
1. Major bullish reversal/seller-exhaustion candles
2. Positive divergence of momentum oscillators vs. price on the daily chart that would scare the bears enough to get out of the way and allow the stock to rise 10% to 20% without too much headwind.
Thus far neither of the above two points have come to pass. What has transpired in the meantime however was that Apple Inc (AAPL) at least stopped going lower, which of course is the first step towards a potential trend change to the upside.
The beauty of the current charts on this stock lies in the very defined lines of resistance, where if broken through the stock should get more upside momentum. The $435 – $440 area, which was former support, has now repeatedly acted as resistance over the past three trading sessions. Thus a break past this level on a daily closing basis would be meaningful enough to also put a more bullish tint on the daily charts I discussed above.
While a close above $440 could be bullish enough for the stock to jump 10% – 20% before heading into better resistance again. Keep in mind that the faithful who bought the stock north of the $600 mark are salivating over any rally to let some of their supply back on the market, thus limiting the stock’s upside for the medium term.