Hedge Fund Liquidation and Breached Support Level Equals a Very Bad Day for Apple

Wednesday is turning out to be a very bad day for Apple AAPL. First, Business Insider reported that Julian Robertson, who runs Tiger Management, recently liquidated the balance of his Apple stake.

This is particularly significant because his hedge fund was one of the last remaining large-scale bulls in the stock. The liquidation represented more than 41,000 shares since the fourth quarter of 2012. In October, he told CNBC that Apple represented a great American company priced at a reasonable valuation.

If you believe Business Insider, this announcement is the nail in the coffin for Apple’s hedge fund following and that might be the catalyst for today’s large sell-off.

Technically, the stock is, again, looking broken. It started on Tuesday when the stock broke through a pivot level. What was interesting was the fact that if you were watching CNBC, the rapid collapse at the $450.50 level became breaking news because of the violence of the descent. Nobody knew what was going on and it became clear that the $450.50 level was not a widely known technical support level. The stock continued lower the rest of the day.

On Wednesday, the stock opened at $439.16 and as it inched closer to its 50 day moving average at $432.29, traders became increasingly worried. It has now broken through that level and currently sits around $426—nearly 4 percent lower on the day. Even worse, it’s doing it on heavy volume.

What does this mean going forward for Apple? Technically, it’s very bad news. The stock left very few strong levels of support on its way up to a recent high of $463.00. Other than pivot levels and trend line resistance not far above $400, the psychological level of $400 is it’s only chartable hope. It’s now set up to retest the $382 lows.

For the sake of not being completely doom and gloom, a surprise piece of news that reignites the bulls or a weak level of support at one of the pivots that becomes strong could put a floor under the stock. We didn’t know about $450.50 so maybe there are a couple of others we can find on the way down.

As we’ve seen numerous times, the Apple knows how to break traditional technical analysis but what should be taken from the moves of the past two days is that this stock is once again broken and set up to move even lower.

Disclosure: At the time of this writing, Tim Parker was long Apple.