Daily Structure and Support in Apple AAPL

Feb 12, 2009: 3:18 PM CST

Seems that a lot of stocks are making possible rounded reversal patterns – Apple (AAPL) is no exception.  We’ll soon know if these patterns are acutal reversals… or massive bull traps.  Let’s look at Apple’s daily chart – if it is to mount a reversal to the upside, it will do so off current levels.  If not… then it won’t take much risk (stop-loss) to know.

Apple (AAPL) Daily:

Apple AAPL

Similar to the chart of Research in Motion (RIMM) I discussed earlier today, Apple is making some sort of potential bottom or “Rounded Reversal.”

Price has broken the prior swing high to make a new swing high and could possibly form a higher low above (or at) confluence support.

Notice how the 20 and 50 day EMAs have now crossed bullishly, providing a potential floor of confluence support on the current down-swing.

We’re also coming off a multi-month, multi-swing positive momentum divergence.

We’re close to an official trend change to the upside on the daily chart, however we need to know the risk-point that this view will be proven wrong.  One would expect the confluence EMAs to hold (currently around $93.00), but if not, we have a tiny swing low (as well as round number support) at $90.00 per share.  A break and close beneath $90 would call the fledgling reversal into question, and a close (or penetration) beneath the January lows just shy of $80 per share would officially disconfirm the reversal theory.

It’s interesting to see a variety of stocks making this pattern.  I’m of the mindset that if one fails, they’ll all fail (because they’ll all be carried away by a downcurrent in the broader market) and that if one succeeds, they’re all likely to suceed… but again the larger variable is the broader market, which is struggling at the moment, and threatening to challenge its November lows.

Keep a close watch on these stocks and others.  Adam Hewison sticks his neck out and provides you with additional possible bullish cases on key stocks in his recently released video “Five Stocks that are About to Move” (Bullish set-ups) that he found and presented using their SmartScan software.

Corey Rosenbloom
Afraid to Trade.com

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