Apple Stock Chart Follow Up 3
I have done two previous chart reads of Apple now in the last few weeks:
The chart was read utilizing technical analysis ONLY learned here on the blog in previous posts, which makes this a truly educational and reader interactive experience:
- Stock Charts, Understanding the Basics
- Ascending Channel
- Technical Analysis, Using the Relative Strength Index
- Technical Analysis, Using MACD
- 50 Day Moving Averages
- Distribution Days Explained
Let’s take a look at the latest Apple Stock Chart:
- RSI (very top) – As originally pointed out, the negative divergence setup took place and now we can see how it has weighed on the stock. The RSI is now tracing towards 50 and out of overbought range.
- Moving Average Support – Apple has fallen through its 10 day moving average (MA), and is now finding support at its 20 MA.
- Distribution Days – Two out of the last four trading days have been heavy distribution days, did we predict this sell off coming?
- MACD Bearish Crossover (very bottom) – I stated in the first Apple post that Apple would end the week sour once a MACD bearish crossover occured, which is when the black line (12/26 EMA) crosses below the red line (9 EMA).
Also not drawn on this chart but can be seen when comparing to the first follow up, the ascending channel has been broken to the downside, another short term bearish sign.
So now what though? Well, we will be watching to see if Apple tests its current weekly low of $155.40 over the next several trading days, if this occurs look for Apple to possibly trend down to its 50 MA. If we were looking to buy in right now, the safest time would be when Apple gets out of the funk and trades up to new highs. If we are holding a long position, then stay long. And, if we are short on the stock, look for the stock to test $115 support, you could actually add to your short position with a trade through of this area. I would cover with a heavy accumulation break past $121, or if the stock falls under $110.
If AAPL pulls back and bounces off the 50 EMA would you consider buying there?
I would definitely consider a buy in there, if anything I can see Apple perhaps hitting its 50 MA intraday, but not closing at or below it. Trading down to $106ish would mean a 15 – 20% retraction off the recent $126 highs.
Buying maybe half a position at the 50 MA intraday would be a pretty competitive price because I would imagine you could place a pretty tight stop loss?
What do you find more effective, trading breakouts or pullbacks?
breakouts for the most part. Usually with pullbacks I am only buying partial positions. Pullbacks are a lot more risky than buying into strength ya know?