A Quick Look at Apple Inc AAPL and Technology

Sep 17, 2008: 7:54 PM CST

The selling pressure was not contained today to Financial stocks – the NASDAQ lost 4.94% today, the greatest decliner of the four major US Equity Indexes, followed closely by the Russell 2000 (off 4.82%).  Many technology and small-cap stocks fell greater than 5.00% today.  Let’s take a quick snapshot of Apple Inc (AAPL) and view its daily and weekly graphs.

Apple Inc (AAPL) Daily:

What surprised me and many other traders I’m sure is that Apple set-up a relatively strong buy signal – a potential bullish flag – at the $170 level after a new momentum high followed by a clean and orderly retracement to the confluence of support via the 20 and 50 day EMA (complete with doji candles).

Ultimately, the trend failed to shift back to the upside and the support was taken out which set-up a test of the 200 day SMA which also formed a doji and potential entry pattern – it also failed.

Since then, investors have punished the stock from $180 to less than $130 in the span of a month – a sharp decline.  We now have a new momentum low registering on the chart and we have to pull back to the weekly chart to find potential support.

Apple Inc (AAPL) Weekly:

The weekly structure (overlaid with Fibonacci retracements) shows potential support comoing in at the 2008 price lows and 61.8% Fibonacci retracement at roughly $120.00 per share.

Should price break $120 solidly on a weekly closing basis, this would set up a potentially quick test of the rising 200 week moving average and also ’round-number’ support at $100.00 per share, which would likely cause bulls to step up and acquire sizeable positions at those prices.

Also, breaking beneath $120 per share would officially classify Apple as being in a confirmed downtrend on the weekly chart (having formed a lower low, lower high, and then swinging down to take out the swing low at $120).

I mentioned that other Technology stocks suffered today, though Apple was hit particularly hard.  Let’s view a snap-shot of performance today on the broad sector.

Technology Sector as a Whole (S&P 500 HeatMap courtesy FinViz.com):

There were only three green spots in today’s trading in technology:

Nvidia (NVDA) actually rose 4.28% which – if you view its daily chart – appears to be in a retracement back to the $11.00 level to the 20 day EMA – it’s in a confirmed downtrend and is experiencing a counter-trend retracement.

SanDisk (SNDK) actually offered a significant ray of light, jumping (gapping) up almost 40% today.  A massive bullish divergence preceded today’s action, and it’s one you might want to look at for a potential long-term position trade.

Finally, Dell (DELL) rose just over 1% today but I wouldn’t get overly excited, given the massive decline Dell has experienced this month – it’s been a culprit in dragging down the entire NASDAQ index until present.

Everything else was deep red.

Check out the MarketClub for support and education if need be, including their informational free daily blog.

Continue to use caution in this difficult and challenging market environment.

7 Comments

7 Responses to “A Quick Look at Apple Inc AAPL and Technology”

  1. SteveW Says:

    Hi Corey,

    I was wondering what you might thing about this chart…

    http://recordpricebreakout.com/wp-content/uploads/2008/09/sp-double-top.png

  2. Tom Says:

    Corey:

    Continue to enjoy your charts and comments immensely. Would like your thoughts on the Emerging Markets. EEM, FXI etc. seem to have really underperformed significantly the US (SPY,DIA, IWM) by my just perusing the Charts. If the world is not going to end I think they are due at least a Bear Market bounce. Do you have any way to measure this gut feeling or any thoughts in regard to the same? Any comments or thoughts in regard to this would be greatly appreciated.

    Tom

  3. Anonymous Says:

    I tried a 30 day market club trial. I paper traded 15 stocks on their short term buy/sell signals. 1 to 2 week holds. Do you follow the actual signals they use for your own trading? Maybe it works better in an uptrending market.

  4. adam b barkeloo Says:

    Wow bro. Your stuff is really good.

  5. Corey Rosenbloom Says:

    Steve,

    That’s the predominant long-term pattern structure I’ve been using as a backdrop for some time now, so yes I’m with you on your analysis. It looks eerily similar in so many ways – down to the Fibonacci and retracements and impulse moves. Haunting. But it helps to have a possible structure to use as a longer term backdrop.

    I would classify that as the dominant long-term technical pattern.

  6. Corey Rosenbloom Says:

    Tom,

    Certainly we’ll get an oversold technical bounce (it happened today and will likely continue). I chose to use MGG and the MSCI Index as the proxies in a post I wrote today, which mainly looks at the underperformance issue.

    I don’t follow these as much as I should so I can’t add much more to it other than more discussion on the technicals which are similar to the S&P, but relatively weaker in the current period.

  7. Corey Rosenbloom Says:

    Anon,

    I enjoy the Market Club for a second opinion and to generate ideas and confirm if what I’m seeing is what their proprietary model is showing. Mainly, it’s a trend following system from what I can tell and strongly encourages the analysis of multiple time frames – the higher for the trend direction (signal) and the daily (or shorter) for entries only in the direction of the trend.

    My guess is that you should not have taken any long signals, given that the broader trends are most likely down in what you traded.

    But also realize that this week threw a lot of people off their game no matter what their strategy was or how organized it was. I warned at the onslaught of this week to basically stay out of the market because it was likely to swing very strongly in both directions, so take that into consideration.

    Personally, I primarily trade the Dow-Mini futures in the morning session and do analysis on broader markets and stocks as an adviser/analyst for a local fund, so I’m a unique client for them. I enjoy Adam’s perspective and educational lessons and their blog as well.

    It’s good to try out the system but the current volatile environment is whipping traders who are new, experienced, short-term, long term, trend followers, mean reverters, etc. It’s very, very difficult with price swinging up and down 3% back to back.

    I would recommend negotiating to get a second 30-day trial if you can once this environment of hype and chaos dies down. Feel free to email me personally with any questions. Thank you for sharing your experience.