Saturday, December 08, 2012

Apple Inc. (AAPL) Complete Chart Analysis


The first chart above is the 20 yr. monthly timeframe for AAPL. We can see from this chart that in the 2008 crash, AAPL retraced into the ambush zone setting up for a normal measured move.  After a retest of the 2007 highs, AAPL went straight up and blew past Fibonacci targets in a series of  Fib. extensions (high to high).


The second chart of AAPL is the daily, where we focus on the last successful Fib. extension long.  After breaking out of a lengthy consolidation, AAPL ripped higher and then pulled back to the ambush zone of the last leg up (high to high) and then proceeded to trade to target 23.6% Fib. extension (green dotted line).

Two indicators foreshadowed an interim top to this incredible run in price:

  1. Negative divergence of the RSI to higher prices, and
  2. The lack of volume in comparison to the move into the previous peak.

After completing a target on a Fib. extension, we redraw the Fib lines from the same anchor to the new high.  If we blow past the 23.6% target in a big way, we redraw the Fibs from the previous peak to new highs and start a new extension.  Since AAPL just breached the target by a few points, no need to start a new extension.






The 3rd chart above, shows that AAPL failed to hold the 61.8% support line of the last Fib. extension.

This failure means that AAPL can now retrace all the way half way back (HWB) from the initial anchor in our series from our monthly timeframe which was the 2007 highs.




The last chart is a weekly timeframe which shows how we might get HWB.  The 1st senario, is that we retest capitulation lows set on November 16th, and then trade HWB from highs as depicted by the white arrows on the above chart, or, we trade straight down to support.  Notice how the target for the ambush short lines up very closely to 50% retracement of the support long.

I favor the 1st scenario because we usually like to trade the first setup after a trend break.  It would seem strange that one of the most technical stocks in the market wouldn't setup a technical short to get us back to support.

The target if the support long is successful is $823.00.  The correction is healthy.

I've pretty much abandoned the H&S top scenario.  One reason is the slightly downsloping neckline.  In my experience, this chart pattern works much better when the neckline slopes slightly upward.

Click on the charts to enlarge.

17 comments:

chin said...

Jamie,

AAPL seems to be bottoming at the 521 level. A retrace to 605 could be in the cards especially with the iH&S forming on NDX,IWM and QQQ.

Would be nice to hear your thoughts on this.

Jamie said...

Hi Chin,

Yes, with AAPL weighing on the QQQ and NDX, its not surprising to see those charts taking on similar patterns. However, if AAPL retests the November lows before retracing to form a proper right shoulder, it will make a much cleaner setup. At the moment I don't see much enthusiasm from the bulls to jump in.

IWM and AAPL charts http://bit.ly/QUxMnO

chin said...

I am seeing a H&S bottom on NDX, IWM and QQQ. How would this pan out with AAPL not participating ?

I thought you had pretty much ruled out the H&S on AAPL in your last post.

I see people mentioning a BAT rather than an H&S on the charts now.

Jamie said...

Chin,

The inverse H&S pattern you are seeing on the indices is a multi week pattern with targets that take us back to 2012 highs. I believe AAPL will participate when if retraces back to the ambush zone at $605.

The AAPL correction is going to continue after that. The NDX and QQQ will lag during AAPL's correction. I ruled out H&S top for AAPL in the sense that I don't think it will correct a full measured move to $300, instead I see it going to $450-$400 based on the FIB retracement.

The BAT pattern people are seeing is wishful thinking IMO.

chin said...

Looks like a straight down to $470 where the 100 Week MA is.

Jamie said...

Change of heart Chin?

I'm still hoping for a retest of Nov. lows. That will form a base from which AAPL can trade HWB to ambush zone ahead of the next leg down.

chin said...

I am hoping so too, but it seems so far away now. I want to sell a put spread for this week's expiration.

Jamie said...

At this time of year, I'm thinking that all of the profit takers who wanted to book their capital gains ahead of the fiscal cliff, have already done so. The selling now relates more to tax losses, people who got in too late and have a losses they want to book in fiscal 2012, against other capital gains. This latter group is much smaller, so I expect short-term selling to end soon.

chin said...

Poor AAPL.
Again one reason why technicals and fundamentals cannot be mixed up.

Jamie said...

Oh Ok, but are capital gains taxes fundamental or technical? ;)

chin said...

very interesting, its OBAMA !!

chin said...

Looks like 505 may not hold today..

Jamie said...

Just breached Nov. low.

Jamie said...

Looks like the breach of the Nov. low has triggered some buy programs.

chin said...

seriously, did you see the sudden surge in the 505 weekly P and 515 weekly call expiring tomorrow

Jamie said...

I don't trade options, but I can imagine that the profits on those trades were seriously deflated on the bounce.

chin said...

Its a market maker's delta hedging strategy.. They make sure calls and puts sold expire worthless.