Shares of Apple (AAPL) are bouncing Thursday after a hard decline in December and weakness since the middle of August. I took a negative stance in my Dec. 16 review, but circumstances can change.
Let's review some charts to get some fresh perspective.
In this daily Japanese candlestick chart of AAPL, below, I still see a weak looking picture. Prices are still in a downward trend and trade below the declining 50-day moving average line and the declining 200-day line. We could be seeing the formation of a "harami" pattern, which could mean a reversal from the bearish trend, but it is too soon to be excited with trading volume relatively light and the On-Balance-Volume (OBV) line still pointed down. The 12-day price momentum chart shows equal lows when prices have made lower lows. This is a minor bullish divergence and is probably not long enough to be meaningful.
In this weekly Japanese candlestick chart of AAPL, below, I still see a bearish setup. Prices have been rolling over in a top pattern for several months. Prices trade below the declining 40-week moving average line. Prices have broken to a new low for the move down and the latest candle pattern does not represent a bottom reversal. The weekly OBV line remains pointed down while the slow stochastic indicator has not made an upside crossover.
In this daily Point and Figure chart of AAPL, below, I can see a minor positive development -- prices reached a downside price target. Reaching a price target is not, in my opinion, a reason to buy.
In this weekly Point and Figure chart of AAPL, below, a downside price target in the $102 area is being projected.
Bottom line strategy: Popular stocks can make bounces in downtrends but they need to be evaluated to see if they can turn into reversals. For now the bounce in AAPL is just that -- a bounce.
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