Apple Says 'Happy Easter' By Setting up Three Technical Traps

Earlier in the week, we reported that Apple AAPL was acting bearish but no technical damage was done. It’s now Thursday and that’s no longer true. In fact, there’s technical damage, galore.

First, the stock is now well below its 50 day moving average—2.6 percent. If there’s a silver lining to this very grey technical cloud, it’s that with a holiday shortened week, volume is low. (All the Apple longs should embrace that to irrational proportions.) Technical moves on low volume are often discarded in the short-term.

Second, once the stock reverses to the upside, a bearish head and shoulders pattern could develop. The left shoulder and the head already formed. If the right shoulder forms, look out below.

And as a not-so-exciting bonus, the recent top is a lower high than the $480 high set in early February. If the pattern continues, a break below $420 is certainly possible.

Nobody knows what the stock will do next week. All traders can do is evaluate the risk/reward of committing money in either direction. There’s major risk on both sides.