Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
ARE YOU LOVING YOUR SERVITUDE? - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

AAPL Apple Stock About To Get sMACked

Companies / Apple Aug 29, 2014 - 10:43 AM GMT

By: Austin_Galt

Companies

 iPads and iPhones. Fad or fashion? I’m not sure. What I am sure about is the company that invented these devices has hit the jackpot! With that in mind, I thought I would investigate the charts of this company, Apple Inc.

Let’s first take a look at the big picture using the yearly chart.


YEARLY CHART

This chart begins in 1982 and price pretty much just flat-lined for the next 20 years. It had a little run up in the dot com bubble but it wasn’t until 2004 that things started heating up. This was when the company started putting an “i” in front of its products name, beginning with the iPod. Such a simple piece of brilliance!

Since then, price has absolutely exploded hitting all time highs this week above $102. Forget about a worthy 10 bagger. This has been more like a 60 bagger! Magical stuff.

So what is likely to happen to the share price going forward?

Well, as long as they keep putting an “I” in front of each new product’s name, it should keep going up if the past is any guide.

But let’s take the emotion out of it and look at the cold hard facts.

I have added a Stochastic indicator which is at overbought levels. While that could continue for some time yet, caution should be heeded. A bearish crossover occurred last year and the red line is still above the black line so bias has to be given to lower prices.

I have added a Moving Average Convergence Divergence (MACD) indicator which shows a nice trend up but the averages do appear to be diverging quite a bit. When the averages get that far apart it usually means some realignment can be expected a la regression to the mean.

I have added a Relative Strength Indicator (RSI) and what is interesting here is that if a top forms around here, a bearish divergence will be made. This top will be weaker than the 2007 top. That could be expected to lead to a decent correction. However, a third bearish divergence is also possible in the years to come so perhaps after the correction, new highs will be seen.

I have also added a Parabolic Stop and Reverse (PSAR) indicator which pertains to the dots on the chart. Price is still in a bullish position with the dots underneath price. However, the dots are getting steeper and steeper which is evidence that price has gone parabolic. Given price has increased over 60 fold, that isn’t really news. But is does suggest that a healthy correction has to be close.

If price were indeed to top out around here, what levels could price be expected to pull back to?

I have added Fibonacci retracement levels of the upleg from the 2009 low to recent high. Keep in mind, the top may not be in but I only expect marginally higher which won’t affect this analysis.

I favour a decent pull back to the 61.8% or 76.4% levels. These stand at $46.09 and $32.74 respectively.

Old tops often provide support in the future and the 2007 top at $28.99 may be helpful there.

Also, I have added a 14 period moving average denoted by the purple line. Price often corrects to its moving averages so this is another potential target. It is currently just under $31 and rising.

Let’s move on to the monthly chart.

MONTHLY CHART



I have added Elliott Wave annotations in order to give some structure to the picture. I only ever apply my bastardised version of EW so experts need not get their knickers in a knot if some miniscule rule is broken. The end of the first wave was the 2007 high and is denoted by the number 1. Then, after a wave 2 correction, a big impulsive wave 3 took place finishing in 2012 and is denoted by the number 3. Since then price has retreated and has just recently nudged to new all time highs. I am viewing this as the final wave 5.

Once again, I have added a PSAR indicator. And just as it showed price going parabolic in the yearly chart, it also shows it here with the move up from its most recent low. Surely, something has to give here soon.

I have added a RSI which shows a high now would be accompanied by a third bearish divergence. The 2012 high was weaker than the 2007 high and a high now will be weaker again.

I have added a MACD indicator which also shows a bearish divergence in the making.

And finally, I have added a Momentum indicator which shows momentum declining ever since it’s top in 2005. Price really appears struggling to reach the finish line!

So, both the yearly and month analysis suggest a top and then significant correction are just around the corner. Let’s now see what the weekly chart is showing.

WEEKLY CHART


I have added a RSI which shows this top forming is about to set up a triple bearish divergence. Price has been losing strength ever since the June 2014 high.

I have also added a Stochastic indicator. It looks like it is having one last hurrah in overbought territory.

One of my favourite topping (and bottoming) patterns is a marginal false break setup. In this case, price looks to be making a marginal break of the 2012 top which is denoted by the horizontal line. A move back below this line will confirm a false break top.

While Apple had a cracker of a run up, the greater the rise, the greater the potential smackdown. Something to ponder at these heady heights.

Disclosure – I have no financial interest in AAPL.

Bio
I have studied charts for over 20 years and currently am a private trader. Several years ago I worked as a licensed advisor with a well known Australian stock broker. While there was an abundance of fundamental analysts there seemed to be a dearth of technical analysts, at least ones that had a reasonable idea of things. So my aim here is to provide my view of technical analysis that is both intriguing and misunderstood by many. I like to refer to it as the black magic of stock market analysis.

Please register your interest in my website coming soon. Any questions or suggestions, please contact austingalt@hotmail.com

© 2014 Copyright  Austin Galt - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules