Apple Stock Pulls Back With The S&P 500 After India Launch: The Bull, Bear Case

Apple Inc AAPL gapped down slightly lower on Wednesday after topping out at the $166.84 mark on Tuesday.

The move lower came in tandem with the general market, which saw the S&P 500 trading about 0.25% under Tuesday’s closing price.

The Cupertino, California-based company is expected to open its first retail store in Mumbai, India soon. A another store is currently being built in New Delhi.

With India likely to surpass China as the most populous country this year, and with the South Asian country’s middle class growing, the expansion plan should help bolster Apple’s revenues.

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From a technical analysis perspective, Apple’s pull back on Wednesday had the stock looking to print a possible bull flag pattern on the daily chart.

The bull flag pattern is created with a sharp rise higher forming the pole, which is then followed by a consolidation pattern that brings the stock lower between a channel with parallel lines or into a tightening triangle pattern.

For bearish traders, the "trend is your friend" (until it's not) and the stock may continue downwards within the following channel for a short period of time. Aggressive traders may decide to short the stock at the upper trendline and exit the trade at the lower trendline.

The Apple Chart: Apple’s bull flag pattern started to form on March 28, with the upwarads sloping pole created between that date and Tuesday and the possible flag formation beginning to form on Wednesday. Between March 13 and March 28, Apple also formed a bull flag pattern and this latest similar pattern has occurred on the break up from the previous bull flag.

• The iPhone maker is also trading in an uptrend, making a consistent series of higher highs and higher lows. The most recent higher low was formed on March 28 at $155.98 and the most recent higher high was printed at the $166.84 mark on Tuesday.
• Bullish traders can watch for Apple to eventually print a bullish reversal candlestick, such as a doji or hammer candlestick, which could indicate the local bottom has occurred and the stock will trade higher afterwards. Bullish traders can then watch to see if the stock breaks up from the possible flag formation on higher-than-average volume to indiate the pattern was recognized.
• Bearish trades want to see big bearish volume come in and push Apple down under the eight-day exponential moving average (EMA), which would negate the bull flag pattern. If that happens, the stock may find support at the 21-day EMA.
• Apple has resistance above at $167.88 and $171.03 and support below at $162.14 and $158.09.

Image edited by Benzinga