Apple Could Plummet Below $105 Because It's In 'No-Man's Land,' Expert Says

Brian Shannon thinks it’s possible for $105 to become a resistance level, instead of support.

Shannon is the founder of Alphatrends, in addition to being a full-time trader, educator and author of “Technical Analysis Using Multiple Timeframes.” He recently joined Benzinga’s #PreMarket Prep to talk about what might make shares of Apple Inc. AAPL drop below $105.

Recent Action

First, he recapped the recent trading action, starting with the peak at $120, followed by a decline to the $105 level. The stock then bounced back up to $115, but Shannon explained it fell again, and the sellers took control at about the $112 level.

“But what we’re starting to look like is the sellers get more aggressive price-wise, not waiting for the rallies up to $115 or $112 to take control, and the tests of support are becoming more frequent at this $105 level,” he said.

Moving Back Up

For Apple to become more neutral in the intermediate term, Shannon thinks it needs to move above the $109 level and hold. To get back into positive territory, Shannon said it would really have to take out the most recent low or high at $113.

Shannon views Apple stock as being in “no-man’s land” at its current level; he said it could be setting up for a decline.

The Potential For Decline

Shannon emphasized examining the $105 level.

“If we break below there and hold below for a day or so, it seems likely that support we’re seeing in the $105 area will become resistance and the stock will decline further,” he said.

He also talked about why he likes trading stocks like Alibaba Group Holding Ltd. BABA and GoPro Inc GPRO on the weekly options.

Check out his full interview here:

Don’t forget to tune in to Benzinga’s #PreMarket Prep broadcast Monday-Friday 8-9:45 a.m. ET for a live, interactive morning show with veteran traders and featured finance industry experts ready to answer your questions for the trading day.

Image credit: Jonathan Zufi, Wikimedia