Watching Apple (AAPL) At A Crucial Level

Apple (AAPL) doesn't need much introduction so I will skip that part of the analysis.  And exactly because everybody knows the company, follows it, and it carries a 1.9% weighting in the S&P 500 it is worth watching closely.  Case in point, yesterday's announcement that Steve Jobs will hold the keynote address at the upcoming conference was all over the news and gave the stock a nice pop.

On a 2 year weekly chart we see a clear uptrend channel that is very much still in place as AAPL currently trades smack in the middle of the channel.

Zooming in closer on a daily chart the down-trend resistance becomes apparent.  After putting in an all-time high on February 16th Apple has had a fairly volatile sideways consolidation period, and more importantly one that looks to resolve itself soon in either direction.  This downtrend line currently comes in just around $350 and gives us a clear risk/reward setup.  The setup would trigger on a solid daily close above the $350 level.  A final profit target on the long side would be near the highs of February and a clearly defined stop-loss could be placed just a smidge below the 50 day moving average (yellow line).   

The potential trade setup (if and when triggered) is interesting in and of iteself.  I am however at least as much interested in closely monitoring how AAPL trades as a proxy for the broader tape.

Happy Trading


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