Monday, November 05, 2012

Apple Inc. (AAPL) Ambush In Play






AAPL has retraced back to ambush zone of the Fibonacci extension.  This support zone should see buyers step in for a bounce.  The negative divergence of the RSI to the last higher high suggests caution.  At this point, we don't know if AAPL will reach the next target of $770.00, but we have a good idea that it will get a bounce from support.  Failure of the ambush zone to hold as support would mean much lower prices going forward.

This morning AAPL announced the sale of 3 million ipad minis since it went on sale last week. The stock is higher in pre-market.

9 comments:

4092ddee-2764-11e2-942e-000f20980440 said...

Hi Jamie, seems like 200 DMA could prove to be a heavy rejection for AAPL unless there is a heavy volume to support this. It has bounced well from the 570 level this morning pre-trading hours. Do you think, a retrace to 620 level is possible with a post election rally?

4092ddee-2764-11e2-942e-000f20980440 said...

Jamie, do you look at weekly MAs too ? AAPL 50WMA is at 559 something. Big traders have to be looking at this number, I would think.

Jamie said...

Hi,

Yes, it is critical that AAPL regain its 200 DMA. A death cross (50/200) is also possible if AAPL doesn't get a decent bounce from the ambush. On the weekly timeframe, I look at the 40 MA as in 40 weeks = 200 days. I suspect most of the hedge fund guys use Fibs and the daily 50/200 MAs. The HFT use fibs.

The strength of the bounce will give a clearer picture for AAPL. Up until now, AAPL has been a self propelling story and it did not need a market rally to make its way higher. But recent stumbles have resulted in profit taking.

I'm not counting on a post election rally. We need stronger economic data and less stimulus to keep the rally moving substantially higher.

4092ddee-2764-11e2-942e-000f20980440 said...

Very well said. You keep mentioning the RSI negative divergence when stock reached 705. Stock has dropped ~18%. How much can one expect the price to correct when a RSI neg divergence occurs ? How do you analyse this ? Thanks for your explanation.

Jamie said...

Negative divergence of RSI and MACD signals short-term top on the daily timeframe, but since we also see it prominently on the weekly timeframe for AAPL, it could signal a longer term top and more severe correction.

4092ddee-2764-11e2-942e-000f20980440 said...

Nicely said, Jamie.
I see a descending triangle in AAPL from 652 until 682. Is that valid ? If so, we should see a breakout of the DT line which is the upper line of the descending triangle. Thanks

4092ddee-2764-11e2-942e-000f20980440 said...

Jamie,your 567 target hit and more. Hope this is the end of the selling on AAPL. Quite an ugly day today.

Jamie said...

Yeah, looks like buyers are staying on the sidelines today. Supports are broken on the US markets. Things could get pretty ugly.

AAPL briefly paused at $567, but fell through too.

4092ddee-2764-11e2-942e-000f20980440 said...

535 the line in the sand.. seems to be disappearing soon. Jamie, what next ? Thanks for all your wonderful insights.