AAPL Intraday – Why Didn’t it Rise?!

Apple Inc (AAPL) announced today that it will begin selling improved iPhones at reduced prices, which would seem like wonderful news for the stock, but the prices were wildly volatile, erratic, and closed 2% lower for the day.  Why?  Let’s take a look.

According to the AP Article “Apple Unveils faster iPhone – Chops Price” (and many more released today), Apple unleashed its 3G wireless phone complete with GPA, which should mean more people will be buying iPhones soon.

First, news of this release was widely anticipated, and the stock has already had a nice run-up in price, and savvy traders don’t wait for news to begin buying.  In fact, once news is released, savvy traders already have a profit and use the news (or those buying from it) to unload their positions into the anxious new buyers.  Could that have happened today?

From an intraday trading standpoint, price opened with an opening gap of a small magnitude, and so the first inclination is to fade the gap, which unfortunately was stopped out quickly for a (hopefully) small initial loss, and the downtrend was established early on.

Price was beneath its key moving averages and failed to rally above the 20 EMA on the first test at 10:30 am.  This was the first major clue that the day’s bias would be to the short-side.

Price did break the 20 twice after this point, but failed exactly at the falling 50 period EMA, which was the ‘turning point’ for the bearish bias.  The second test formed a doji (reversal) candlestick, and then news was released, which was digested quickly (to the downside, unfortunately) as price slammed down to new intraday lows and formed a climax reversal.

Traders reassessed and then price bursted above the key averages… only to peirce them once again and form a double-bottom pattern complete with a positive momentum divergence, shattering any hope of further downside action.  The stock had a volatile ride, but made a clean dash higher into the close.  The intraday range was roughly $8.00, which led either to quick profits, or massive frustration, depending on how well traders fared in these conditions.  Trading news can be extremely difficult, but often the prevailing structure of the technicals can give us clues (but never certainties).

Where does Apple stand on the daily chart?

Price has rallied sharply since the March lows, but has done so into a potential double-top formation, complete with a negative momentum divergence.  Volume picked up today as price fell, which is a potential bearish sign.  Also, price formed a new momentum low near the end of May, which could signal a test of the May lows or worse if the double-top pattern materializes itself. Bulls have work to do if they expect to push the price higher, but don’t count Apple bulls out so quickly.

Apple likely will continue to be a darling (or at least ‘most watched’ or favorite) stock, so keep your eyes on any possibilities on this rising giant and what it could mean for the overall stock market.