2 Charts To Make Sense Of Apple's Strong Uptrend

Eagle Bay Capital founder and Market Technician JC Parets tracks the performance of the Dow 30, and recently analyzed Apple Inc. AAPL.

Weekly Chart

Structurally, the shares are in a sturdy uptrend. In February the stock hit Eagle Bay’s upside target close to $129, which represents the 161.8 percent Fibonacci extension of the entire 2012-2013 decline.

“In addition, momentum is putting in a bearish divergence at these new highs,” the firm’s Dow 30 report explains. “This continues to suggest taking profits until it digests these gains further and approaching this more from a tactical perspective” (see daily chart below).

With an upward-trending 200 week moving average and relative strength in a strong slope upwards, Parets sees little reason to be short, and says he would continue to wait for more information before acting on Apple again.

Daily Chart

A look at the daily chart (for last Wednesday) provides a more tactical view. Short-term, Apple reached Eagle Bay’s upside target in February, near $129 (based on both the weekly price target and the 161.8 percent Fibonacci extension of the November-January decline). The company continues to struggle with this level and, until more data and/or consolidation of these gains can be seen, Parets thinks there is not much to do.

“With an upward sloping 200 day moving average and momentum in a bullish range I see little reason to short this,” he said. “We do not want to own AAPL if prices are below the 3/19 highs.”