Apple AAPL Update: Daily Support but Monthly Bearish Engulfing

Jan 31, 2010: 6:38 PM CST

Apple (AAPL) investors rode a roller-coaster of news and stock price action last week, culminating in a massive sell-off in four days from the $215 area to the present $190 level.

Let’s take a quick look at the Daily chart to highlight a key support level and then link to a video analysis by Adam Hewison who notes the ominous “Bearish Engulfing Line” on the Monthly frame.

First, the Daily “support” (line in the sand) zone for Apple stock:

Notice that volume surged on Tuesday and Wednesday last week, trading roughly 60 million shares each of those two days.  That’s a result of Apple’s earnings announcement which was then followed-up by Steve Jobs announcement of the iPad devise… which wasn’t received well by the technology community (and investors, it seems).

Focusing on the charts, we see the “Line in the Sand” of support resides between $185 to $190 per share, which simply looks at the prior price support zones from the prior few months.

We’re under the 20 and 50 EMAs and that is a bearish omen that is often a precursor to a price reversal… but we’re not there yet (as long as we’re above the  $185 level).

The volume surge during Thursday’s and Friday’s price sell-off is not encouraging to the buyers, neither is the negative momentum divergence and then new momentum low (plunge) seen on Friday (in the 3/10 Oscillator).

There’s a lot to look at, but I can simplify the daily chart by saying that the highlighted zone is the key ‘line in the sand’ to watch going forward.

Adam Hewison of Market Club – of which I am an affiliate member – recently released a quick 4-minute update video entitled:

Apple Update: Steve Jobs, the iPad, and King Gillette

While Adam discusses additional information, including expected Fibonacci retracement levels, trade triangle signals, and the broader picture, one of the things I found most interesting – and one that slipped my analytical radar – was the Bearish Engulfing Candle/Line in the Monthly Chart of Apple.

Here is a screencap of his video:

Clicking on the video opens his video page for you.

I won’t spoil the fun of the video, but I will say that Bearish Engulfing Candles on Monthly timeframes can be significant charting developments – one we need to watch closely – and it’s something that may have flown under the radar of traders who monitor intraday, daily, and weekly charts exclusively.

Either way, $185 is undeniably important so let’s keep an eye on how price trades next week along that level.

Corey Rosenbloom, CMT
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2 Responses to “Apple AAPL Update: Daily Support but Monthly Bearish Engulfing”

  1. Speculation Says:

    Looks like we have major support on the $SPX.

  2. Guest Says:

    Looks like we have major support on the $SPX.