Is Apple's Latest Decline 'Purely Technical'?

Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show.

Apple Inc. AAPL share are trading lower in Thursday's session.

'Purely Technical'

One potential catalyst for the decline is the easiest to explain and understand: it's purely technical.

Apple has experienced an incredible rally since its last blowout earnings report, leaping from a January 28 close of $115.31 to an all-time closing high on February 23 of $133.00.

From a technical standpoint, this week's pullback is healthy for the issue, as the weak longs are eliminated and the long-term shareholders can increase their stakes.

Thursday's sell-off appeared to be a perfect storm created by the previous four days of trading action.

Along with tight intraday ranges of less than $2.00, the stock put in place a series of four lows within a very well defined area ($128.09 to $128.32) -- a quadruple bottom.

Related Link: A Comprehensive Preview Of Apple's 'Spring Forward' Event

On Wednesday, it posted a close ($128.54) just above that area, as opposed to bouncing and closing further away from the critical support level.

Thursday's Action

Early in Thursday's session, shorter-term traders were conditioned to buy at this level once again, since it had worked on the past four occasions.

When a rally did not materialize, they quickly exited the trade and exacerbated the decline beyond the $128.00 level.

Aggressive traders may have identified the technical breakdown and proceeded to short the issue, accelerating the downward momentum.

It's also possible some longer-term players placed protective sell-stop loss orders at this level to lock-in gains from its recent rally. 

Apple is down 1.5 percent on Thursday afternoon.

Disclosure: The author is short Apple.