It’s now nine trading sessions ago since I last mused about the technical picture of Apple Inc. (Nasdaq: AAPL). On March 25th I discussed (here: http://investorplace.com/2013/03/apple-still-has-some-technical-juice-left/) that the stock looks to have enough juice left for another marginal move higher, while the $450 area would be my line in the sand to potentially consider the short side of the stock again.
A glance at the six month chart and hence the major down-swing in Apple Inc. (Nasdaq: AAPL) reminds us of the initial breakout test past the down-trend that the stock staged in early March. While for the quicker hitters among us there was a long-side trade to be had (which I discussed), for those with intermediate to medium time-frames the setup has so far been a scratch at best. As such it is time to re-evaluate the chart and sniff at a new potential setup.
In mid-March the stock managed to peek above its 50 day simple moving average (yellow line) for exactly two days before gravity kicked back in and pulled it lower. As such, this simple moving average de facto still holds as resistance until proven otherwise.
As of yesterday’s (April 4th) close, Apple Inc. (Nasdaq: AAPL) is well on its way to re-test the early March lows near $419, which however given the downside velocity and steepness of the slope now has a good chance of being pierced through quickly. In other words, the stock is hanging by a thread here as the $425-$419 area serves as major intermediate term support.
At this stage it is handy to look at simple retracements to pin-point potential downside targets for the stock should the March lows give quicker than a prom dress (might want to edit this). If we measure the swing from the late January highs down to the March lows, note that by late March the move was retraced by 50% before finding resistance. A 25% extension of said move would get us a target well below the $400 mark, namely closer to $390 although better lateral support comes in at $380.