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I haven’t touched Apple in a while now as I was not able to find the right timing to get involved. As many of you already know, I do not day trade and I do not get into anything short-term; so it’s a big deal to me to find that right timing, not just with the stock itself, but also timing it right with the overall market indices. Obviously Apple has been in an primary uptrend since our ‘bottoming analysis‘ back in late-June of 2013, since then Apple has been trending up very well cultivating primary-term higher lows and higher highs. As of today, we do not have any kind of major-topping patterns or signals, so I don’t believe primary-term threat is there for another crash, but it seems as though we are seeing a intermediate-term pullback within a primary-term uptrend.
In this post, I want to share with you technical levels I will be watching to possibly go long for a Position-Trading (3-6months +) positions. Keep in mind that just because we get to these levels (levels I am about to share with you), does not mean that you go long blindly. You must ascertain and analyze the situations and the sentiment of the price-action correctly to make sure it has a confirmation of a bounce before pulling the trigger; also it will prudent to analyze the overall market index to make sure the overall market is going to bounce back up so that Apple can able to grow in the good soil of bullish-sentiment market. Why does it matter? We can have phenomenal price-action or signal to go long but if you find yourself going against the whole market, things can be very hectic (it can be done but very rough).
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Level 1
[Daily Chart]
In my opinion, this $103-$100 level is likely to become, next, a strong support-level should the price continues to decline. We do have 100SMA residing there (which has been served as strong support back in October 15th), and this is the 38.2% Fib. Retracement level (not shown in the chart above–refer to the chart below), and not to mention the fact that its just above the Gap Area (shaded box). Many times when the price reverses, it gravitates towards the next open gap-area to fill so this might be where the bears are trying to push down to. Also its possible that the upon filling the gap area at $100ish, it could act as support and bounce.
Level 2
[Daily Chart]
It’s the 200SMA (pink moving average above) level and it’s the Fib. Retracement 50% level and also it’s the price-action, congestion, support-levels (highlighted). This is the level where Apple had a strong bounce back in October 15th, so it’s quite a prominent level at around $96-$94. If the price comes down to this level, it’s going to make things very hectic for the buyers because this is the territory where bears can able to cultivate major H&S formation (primary-term reversal pattern which we’ve seen recently on Tesla chart). $94ish being a possible neckline, bounce back up to $103ish level as a right shoulder, and falls back down for a confirmation if break well below $94. I am not saying it’s going to happen, I am saying watch out when it does come down to this level because when it does, I wouldn’t be hasty about going long (again because of the possibility of H&S formation).
Level 3
[Daily Chart]
This would be the most attractive price-level for me start accumulating positions for long-term trade as long as Apple does not form that massive H&S formation as we’ve discussed on the Level 2 scenario. This is the last Fib. Retracement level of 61.8% that is coinciding with potential long-term uptrend support at $90 (see red uptrend-line). Unless the whole market crashes, I do not think Apple can go any lower than the level of $90; but then again Apple might never have to come down to this level. Should the price declines to $90ish level, I will be watching very closely for a good entry for 6 months to 1 year term trade/investment on Apple. Again, I am not saying it’s going to come down to this level (it’s impossible to know with limited data we have as of today), but I am saying if it comes down to this level without forming major reversal pattern such as H&S, I will be very incline to start accumulating with a good confirmation of a bounce.
We are now at 10% correction from peak.Things could get interesting.
Thanks for a great article kay2kim! Apple went down from $119 to $107 and came back strongly after the Fed gave its optimistic statement on Wednesday Dec 17. It has gained $5 in the last 3 days. Expectations are high for apple and fundamentals look solid.
I am trying what are the chances for a bigger correction? The trend i am familiar with is that apple starts rising in price approximately 4 weeks before earnings announcement. Since earnings is around Jan 27, we should be expecting a rally commencing soon? What are the signs to watch that would imply trouble with apple and a potential decline? thanks for your guidance!
appletrader007 Hey, I’m not as smart as K but I’ve been trading aapl for years and I agree that we could see a run back up to 120 before earnings. We might have to wait until end of next week during new years before we see big institutions buying. No technical reasons but they could see the recent drop as a buying opportunity ahead of huge iphone sales earnings and watch launch in 2015. I think too many pigs are starting to get back in this one. All these calls now for apple to hit $200 per share and $1 trillion evaluation. So much noise. Last time this happened, it took a nose dive. it also did so on no new product launches. After the watch, what is there? I’m looking for a repeat of the last big head & shoulders drop topping. Could take months but we shall see if it forms. I listen to K. Ignore the crazy noise and check the techicals. If there is fundamental news on the stock to confirm the techicals, then I am in.
appletrader007 Maybe we just formed the left shoulder? could go past 120 ahead of earnings in anticipation to form the head.
appletrader007 Zex_M19 Currently Apple is trading above 10,20,50EMAs so benefit of the doubt goes to the buyers in the miner and intermediate term. With a weekly hammer candle last Friday, I do think its going to continue higher as long as the indices continue to illuminate bullish environment for the stocks. Next level of resistance to watch is $115-$116 (gap-fill / resistance). Also bulls did a nice job of protecting that gap up last week above all moving averages. so yes looks bullish here.
2kaykim appletrader007 Zex_M19 thanks for your comments. Good to see you go long with Apple…although the timing sucks. Its dropped $5 since you got in. Are you concerned about a continued lower trend? what is the probability in your mind? How what expiration did you buy your $112? sucks to see apple go down after a nice runup to $119.
appletrader007 2kaykim Zex_M19 I have ITM LEAPS and this is part of the game, its not always going to be that easy. $106-$105ish is the level to watch for support also 100SMA is residing at that level as well.
2kaykim appletrader007 Zex_M19 thanks. Any idea when this selling stops?
appletrader007 2kaykim Zex_M19 haha good question but no-one truly knows when its gonna stop, we can only perceive potential level of supports.. If we have more data that supports the bullish case next several days, I will update my post
2kaykim appletrader007 Zex_M19 Lol:-) Thanks!!
appletrader007 2kaykim Zex_M19 WOW! what an amazing quarter apple had, truly for the ages! now that we broke through the resistance of $115, would love to hear your perspective. any expectations of a melt up rally…perhaps head to $130 soon? Thanks again!
appletrader007 2kaykim Zex_M19 hi, you can track on my Journal Post here https://2tradersclub.com/2014/12/28/im-long-on-apple-inc-aapl/ (ill probably update soon).
Also I covered AAPL on my Mid-Week Video last night here https://2tradersclub.com/2015/01/28/video-mid-week-update-with-kay-kim-understanding-the-environment/