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Are Apple's Technicals About To Sour?

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Are Apple's Technicals About To Sour?

Is Apple back to being the go-go market leader as it was in years past?

After months of underperformance, Apple (NASDAQ: AAPL) stock has been on a tear recently.

Shares have risen nicely for over a year now (nearly doubling), but especially recently where the stock has handily outperformed the S&P 500 over the last 100 days or so.

What The Bulls Are Seeing

Apple bulls are once again noting how well the stock has traded versus the market recently and are fully anticipating that to continue. After all, this is a trend-following, momentum market. Right? The bulls note that if Apple can just clear the dual resistance hurdles that lay just ahead, the doors will swing open to much more upside.

What The Bears Are Seeing

Apple bears have technical evidence of their own to which they can point. As the weekly chart of Apple below shows, the recent strength took the stock right up to longer-term “correction resistance” at $98.66 - set by the 100 percent Fibonacci price projection line (used frequently to estimate “abc” correction stopping points).

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Remember, this is a weekly chart and Apple could, as it did two weeks ago, violate that resistance on a daily basis without negating the bears' set-up. So, even though the stock has been outperforming the market in the last few months, the bears would contend that this is a suckers' rally and that the stock is still trading below its own all-time high of $100.72 from back in 2012.

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Who Has The Upper Hand Here – The Bulls Or The Bears?

Only time will tell which side will win in this Apple battle. The bears will have to cover up and admit they're wrong if the stock continues to trade bullishly and breaks through the $98.66 level on a weekly closing basis.

A continued run through the all-time high will only be a formality at that point. However, as long as “correction resistance” remains un-violated on a weekly basis, the bears will remain resolute and confident in their short-side trading stance.

How To Trade Apple From Here?

Technicians would say the best tactic with Apple shares from here is to sell rallies up to the $98.66 resistance and to honor stops on any close above that level on a weekly basis and above $100.72 on a daily basis. The downside target for the bearish trade will be at least $85 in the short to intermediate-term.

For those looking to go long of Apple stock, the technicians would tell you to try to buy a dip in the stock down to the uptrend line which comes in at around $84.65 currently.

But they would urge aspiring bulls to honor stops on any close below $84. The upside target for any such long positions would be the 138.2 percent Fibonacci projection line at $103.97 (not even visible on the chart).

Posted-In: FibonacciTechnicals Trading Ideas Best of Benzinga

 

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