What’s Happening to AAPL?!

Jun 12, 2008: 2:18 PM CST

With one hour left until the close, Apple Inc (AAPL) is down 4.5% for the day and just over 7% for the week.  Let’s look at the chart to see if we can get any clues to where the selling might stop.

First, the intraday 5-minute chart to see what is going on with the price action and accelerating selling pressure:

Price is exhibiting a “trend day down” where price begins at one extreme and – so far – is ending at the other extreme.  The definition is confirmed by the fact that price found continual resistance at its falling 20 period EMA (which also gave you clean, low-risk entries into the prevailing and fast moving downtrend).

What did this selling pressure and momentum do the daily chart?  Is there a target there?

With all the recent seemingly bullish news for the stock, the technicals (chart patterns) did not confirm the news.  In fact, large funds may actually be using the good news as an excuse to liquidate – only their methods are either being exposed or exacerbated by other selling.

Notice that, no matter how bullish you got on this stock, an obvious momentum divergence preceded today’s ‘massive’ (if it can be called that) sell-off.  This absolutely did not come as a surprise.  A double-top formation complete with negative momentum divergence was a clear warning sign that ‘things just weren’t right’ with this stock in the short-term.

I’ve placed a target of $160 which is the 200 period moving average and the zone of the April retracement top.  That could be the next logical chart area of support, but we will always watch day to day to see what happens to the stock.

As for the weekly chart?  It also showed some signs of advanced weakness going into today that, perhaps now, have become more obvious.

The biggest ‘red flag’ from this longer-term chart was the non-confirmation from volume flow as price continued to trek its way higher.  As prices increased, volume decreased, meaning the higher prices were likely supported by fewer and fewer buyers.  What happens when the last buyer is satisfied?  Or at least the aggregate buying pressure is satiated?  Price has much higher odds of falling.

The $160 target seems just beyond the rising 20 period EMA here, so the $165 level could hold on this chart.  A word of warning to the bulls – if the $160 level fails, the next logical support zone would be the rising 50 period moving average, which currently stands around $150.

Has Apple’s moment in the sun truly fallen?  Or is this just a temporary pause in a broader up trend?  The odds seem to be shifting to the bears in the short-term but we’ll continue to watch any new developments in Apple with great interest, as I’m sure you will as well.

9 Comments

9 Responses to “What’s Happening to AAPL?!”

  1. FRED Says:

    the corporate bank cats are teaming up as usual – to push down the price- to get momn and pop holders scared , and quitelly aqumulate for the next step up.

    the iPhone G will Sell “40-50,000,000 units globally in the next 12-18- months – Go do the math.

    Mac computers will continue to grow sales at 25% a year for the next 5 years -go do the math,

    ipods will continue to come down in price and continue to mps 3 palyers out of business – growing at 50% a year.

    Apple should be $300-500 per share in the next 12-18 months –

    for the record

  2. Anonymous Says:

    THIS WORLD IS INSANE!

  3. boredtrader Says:

    it’s a consumer stock, what did you expect to happen, aapl turning into the next MSFT?

  4. HARRY WALKER Says:

    Note; a change in command per cnbc mad money

  5. Ellis Bouchard Says:

    It looks like we could be headed for a massive Double top with divergence in MACD. That’s when I would short this.
    Because it is unexpected is why it will probably happen.

  6. bob Says:

    people are afraid he’s sick

  7. Corey Rosenbloom Says:

    I saw part of the keynote – he did look skinnier and paler than normal, and now the word floating around the Apple blogs is “emaciated.” Scary.

  8. Hayden Hsu Says:

    The man is in his mid 50’s hes not going to die. He will have the best medical attention the world has to offer. He’ll probably make the apple pacemaker for all we know.

  9. Anonymous Says:

    a lot of true believers in apple make its price movement somewhat anomalous to me. despite what looks like a strong trend down, friday the 13th it retraced most of the day’s downturn. of course the market bloated upwards as well.