I wrote about Apple ( AAPL) last Thursday when I returned to "active duty" at Real Money. The charts and indicators looked weak and we wrote that "Bottom-line strategy: Some loyal AAPL owners may not worry about a decline to the $180-$170 area, but I do. In a weak market, a bearish price target could be overrun and chart support can disappear. AAPL looks like it is going to pull back. And if I find it attractive at a lower level, I'll have no problem re-buying it."
AAPL is indicated to open around $7 lower or around the $190 area. Using our imagination and experience let's see what this weakness could do to the charts.
In this daily bar chart of AAPL, below, we can see that last Friday that prices tested the rising 50-day moving average line and the slower-to-react 200-day line. AAPL could open below these popular moving averages and continue to lose ground.
The daily On-Balance-Volume (OBV) line finished last week at a new low for the move down signaling more aggressive selling.
The Moving Average Convergence Divergence (MACD) oscillator shows a clear turn lower and signals that traders should take profits. If AAPL soon crosses the zero line it will be an outright sell signal.
In this weekly bar chart of AAPL, below, we can imagine that prices test and could well close below the rising 40-week moving average line.
The weekly OBV line shows a small turn lower and the MACD oscillator is narrowing which can foreshadow a bearish crossover in the weeks ahead.
In this Point and Figure chart of AAPL, below, we can see a new downside price target of $172. This lower target means, to me at least, that the $170 level could be tested and broken. A break of $170 means that the lows of January or the $150-$140 area is a possible target in the weeks ahead.
Bottom line strategy: AAPL is likely to make a significant gap to the downside this morning. AAPL does not make many downside gaps - upside gaps have been more frequent. A downside gap is a sign of aggressive selling and longs should not ignore it. Take appropriate action.
NVDA may be back in the game, but they aren't the star again. At least not yet.
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