(Long term bullish trend)
We are in a long term bullish trend. $AAPL is extremely bullish stock so we are not going to hit $500 area anytime soon for some of you that are very dramatic when the stock starts to fall.. =p
This is the momentum that has been built over many many years that you can not ignore. This thing has solid bullish momentum to it (big picture) so when we say bearishness on $AAPL, we are merely talking about a pull back or a corrective move.
So the bearish arguments I present in this article, I am not talking about complete reversal of the trend but I am talking about the corrective or a pull back move (big scale).
(100SMA / Fib. Retracement)
Fib. Retracement Zone is very important. The retracement zone is created so we can see where we might bounce and continue bullish. $AAPL is currently trading just above 61.8% retracement level which is the level where it could bounce and continue bullish. However if this level is breached, say hello to $580-$590 (200SMA) level.
But this level is important because it also coincides with 100SMA. It makes that level that much significant and that much stronger support.
Currently sitting on a major support of 100SMA and bounced. 100SMA was the support that lifted the whole bearish move back in May 18th so this something Bears should definitely watch out for and the best case scenario for bulls is that this might be it. This where it’s going to bounce and never look back. This could be it!
(Indicators/Oscillators are OVERSOLD)
All three oscillators are currently in OVERSOLD status. (Keep in mind though, this does NOT mean that stock has to reverse. Just look at the bullish trend back in Jan through May, they stayed at OVERBOUGHT territories for about 5 months so we could stay at oversold territories for the next week or so) But it does mean that it will pull back to bullish side (so the oscillators can rest a little bit) but in the worst case scenario it could reverse but no such confirmation of that yet.
(Daily Bearish Divergences several weeks ago.)
At the top at around $700, everyone questioned why did $AAPL tank for no reason at all (it tanked week after iPhone 5 launch. Many investors were burned and questioned why why why). Well the reason was in the Technicals. We had this massive Bearish Divergences on all three indicators on a daily chart. This thing made $AAPL tank to where we are today.
You remember back in April this year? That’s what did it. We had bearish divergences on daily chart at that time and it tanked. And we had it again last last month. This is why you can NOT ignore technicals.
I remember calling out extreme bearishness late September and got many hate mails. But you can see in my articles here regarding the warnings when $AAPL was trading around $680. I banked about $46 move downside from this daily bearish divergences alone (not day trading but swing trading. Held for 11 trading days).
(Weekly Bearish Divergences TODAY)
All three indicators with CONFIRMED bearish divergences especially with MACD (Moving Average Convergence Divergence) with NASTY angle on that thing! Yea this is on weekly chart so it could take a while until it takes effect but it will play out because this is rare that both Daily and Weekly Divergences are happening at the same time. $AAPL is very sensitive to Divergences and this will play out. And when it does, its going to be UGLY!
(HnS Neckline has NOT been broken)
We had initial breakaway gap which was confirmed and we had a continuation gap which was filled today. So since the continuation gap was filled now there is less weight on bearishness because of that. However the neckline held true today. Bulls tried to make a run to push through but got rejected at the neckline.
This is how you view the Head and Shoulders pattern. Almost always after head and shoulders is confirmed, it will tank but shortly after it will come right back up and test that neckline. This is where many people think that the HnS is done and we are going to reverse. And this is where many bulls get burned. It is very common practice in stocks that I see it most of the time when the stock has formed HnS pattern. They will come back up and test that neckline and if that neckline holds true, IT WILL TANK faster and harder. Just look at $QQQ the testing of the neckline.
(Moving Averages are crossing)
As you can see they don’t cross very often. It took 6 months for this to happen and it is very significant that it did.
Last time they crossed, $AAPL tanked another 50 points so definitely something to note of.
So what do you think?
Leave me a comment, opposing views, or simply your thoughts on this.