Bullish Arguments
(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.
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Bearish Arguments
(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).
http://2tradersclub.com/aapl-bearish-divergence-warning-daily-weekly/
http://2tradersclub.com/aapl-10-reasons-of-why-im-extremely-bearish/
(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, $AAPL tanked another 50 points so definitely something to note of.
So what do you think?
Leave me a comment, opposing views, or simply your thoughts on this.
10 thoughts on “$AAPL – Bulls vs Bears: Battle Before the Earnings. Who Would Prevail? (Update 10/18)”
Kay, Good stuff! I am not sure what you mean here “The price point from the breakaway gap to the continuation gap might be the price level we are going to see from the continuation gap to the bottom of this current bearish trend.” Does that mean approx $650 – $50 = $600?
When I went back and looked at the 4 death crosses on aapl over the last 3 yrs, only 1 of 3 ended in a share price destruction. But this is headed there if aapl does not reclaim the 10sma soon. The Stochastics are beginning to show bullish divergence.
So, there are some land mines ahead because we have a iPad mini event and then ER. So i think, ER could push this one direction or the other.
hey mike. yea thats wut i meant. if the continuation gap remains open we might expect around $600 level of downside. I guess I wouldn’t put much weight on the death crosses as much as bearish divergences that I am worried about.
Also I don’t see bullish divergence on stochastics. u looking at daily chart for that?
Kay, I was looking at the daily….looks to have just begun but I need to go back and look closer. But I think this thing is still bearish, and there are some key battles ahead. Specifically, over 635 tomorrow leads to 640, and if it pushes to 644, this is going to be a huge battle ground. That should be around the area of trying to reclaim the 10sma. Over 10sma leads to 50day which could be the top leading into ER. There are soooo many things driving these battles (fear, uncertainty) but I am thinking we could end up around the 644-650 range right into ER. Then, flip a coin. It could get crushed, or gap up depending on how street views the ER. Thoughts on this?
BTW, have you looked at the chart on goog? Man, it seems to have the exact same set-up that aapl just experienced. Island top, lost the 10sma, lost the 21sma…..headed to test the 50day?
Kay, look at FSTO on the daily. Turning bullish? Maybe?
mike wuts FSTO? yea indicators are extremely oversold.. and it needs to rest a little if its going to continue bearish for sure. uhmm.. not so sure about the earnings how its gonna play out before or after. I usuallly dun trade through it so.
Yea $GOOG 20EMA has been life line for goog for several months of this bullish run and today we are just dangling around that 20EMA. should be interesting.
If bulls come back and fills the gap, I will be starting to change my bearish views on $AAPL.
Kay, Fast Stochastics
mike, no.. i dun see any bullish divergence even on the fast stoch
Kay, 644 was not much of a battleground….sure wish I was running with calls from the LOD. They paid 3X investment today!! How you seeing this setup now? Still the same. I think the Friday pin action will take over soon, so we may not get over 660 max and then pull back to a 650ish area by end of week imo.
yea very nicely bulls came back after finding some support at 100SMA.hammer yesterday and today with big white candle. IF $AAPL close above $655 area tomorrow with another strong run tomorrow, I would say that bears are really losing their momentum. However if $AAPL fizzle around that $650 area tomorrow and slow down, all it is its testing that right shoulder neckline as new resistance before another bearish run.