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Intro
Please keep in mind that I am not calling the top here, and definitely this is NOT the level to start short-selling, neither. I’ve been asked regarding Apple and what level I would be willing to initiate positions. Because I only get into longer-term trades (3-6 months for equities), current level on $AAPL does not attract me, therefore, I wouldn’t touch this stock until I see a steep decline on this.
Again, I am not saying that the ‘steep decline’ is going to occur, I am just saying that when it does occur, I will be watching closely to initiate. To be fair, we do have potential bearish signal on $AAPL, but that’s just a ‘potential signal’ and without proper price-action to condone that ‘signal’, that signal can become obsolete. However, if the price action starts to endorse/confirm that ‘signal’ going forward, then we do have problem for the buyers.
As of today, with tangible data that has been given to us, the trend is obviously up in the miner, intermediate, and the primary term. We did find firm support right on that 50EMA (daily) on 8/8/14 and 9/9/14, so the trend is continuing higher and its solid in the intermediate term.
Only concern for the buyers is that we do have potential bearish divergence forming on this stock similar to January of this year (see chart below).
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Daily Chart with 200SMA
Looking at the price action since the last ER, price action continues to support the bulls as they are continue to cultivate higher-lows and higher-highs. And the bulls can continue in this fashion, and no-one truly knows when we are going to get that steep pullback (and we may never). But looking at the price action on the January of this year with that bearish divergence in the picture, if the sellers decides to show up, we may get another steep decline to 200SMA (see green arrows) in few months. And that’s the level where I will be watching closely to initiate fresh/new positions for a long-term trade. Again, that opportunity might never arise but I am a very patient trader so if it doesn’t come, I don’t need to be on this trade (there are plenty fish on the sea).
Looking at the last three months price action with the indicator, we are currently forming bearish divergence (price action making higher-highs but the indicators formed lower-high). Again, this does NOT mean it must roll-over but when it does, definitely a warning signal.
In my honest opinion, I do not think this is a good level to initiate any new/fresh positions (for a longer-term hold), but I do think this is a good level to continue hold your current-long positions if you’ve been holding on it for a while. Trend is still up and it still looks very good for higher move, but again, with that bearish divergence in the picture, I am not sure how much more strength we have left from the buyers.
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I will be analyzing $AAPL on a bi-weekly basis on our LIVE Mid-Week Event. Sign up here.
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