Monday, October 08, 2012

Apple Inc. (AAPL) Correction In Play

From the weekly chart of AAPL on the left, we see that AAPL traded a Fibonacci extension long to target and now it is pulling back. Note the negative divergence of both the RSI and MACD on this last leg up.  This divergence foreshadows a correction.

On the daily chart (right), we have plotted the same studies and we have replotted the fibs from the same anchor to the new high.  The expected fib.retracement shows that the new ambush zone is in the range of $567 down to $535 and the new target is $771.  This technical support zone will likely get a bounce when it trades, notwithstanding any bad earnings results.  However, we can't ignore the red flag signaled from the RSI and MACD. These imply a deeper correction is likely.


Anonymous said...

Thanks for sharing the AAPL post.

AAPL is a mess right now.
What is the technical support zone for AAPL ? The stock bounced back from 623 (close to 100DMA) and has held well.
Also,why are you considering a whole year's worth of data for your fib levels ?

Thanks in advance.

Jamie said...

I'm drawing my AAPL fibs from the breakout point. AAPL formed a cup and small handle at the baseline and then it went straight up. That anchor stays the same unless we blow way past the 23.6% target.

After we reached the the 23.6% target AAPL traded slightly higher, not a blow out, so we use the same anchor and stretch to the new high, to give us the new ambush zone.

The $623 level that resulted in a bounce yesterday was a little more than half way back from the most recent highs to the $567.70 level I have indicated as the 50% support zone. In other words, if you place fibs from 567.70 to 705.07, you'll see we bounced from a normal fib low to high.