Legend has it that Isaac Newton formulated his gravitational theory after watching an apple fall and asking why the apple fell straight down, rather than in another direction. Shares of a different kind of Apple (AAPL) are falling and I have a theory how far they may decline in the weeks ahead.
In this daily bar chart of AAPL, below, I can see that prices are testing the lows of October and November. A clean break of this level is likely to precipitate further declines. AAPL trades below the bearish 50-day moving average line and the bearish 200-day moving average line. The trading volume has declined the past six weeks or so, but the On-Balance-Volume (OBV) line is still pointing downward, telling us that sellers of AAPL are being more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator has failed at the underside of the zero-line and is signaling a new outright-sell signal.
In this weekly Japanese candlestick chart of AAPL, below, I see a weakening longer-term picture. Prices have been rolling over since the middle of 2021. Prices are trading below the declining 40-week moving average line so math tells us that the trend is down. The weekly OBV line has been working lower since February and that means sellers of AAPL have been more aggressive than buyers for several months now. The trend-following MACD oscillator is bearish.
In this daily Point and Figure chart of AAPL, below, we can see that the software is projecting a potential downside price target in the $115 area. A trade at $134 is needed to refresh the downtrend.
In this first weekly Point and Figure chart of AAPL, below, we used close only prices and can see a price target of $125.
In this second weekly Point and Figure chart of AAPL, below, we used a five box reversal filter. Here the software suggests a decline to the $109 area.
Bottom line strategy: Many money managers believe strongly that AAPL is a long-term buy-and-hold stock, but given the right circumstances they could do some selling. A break below $134 on AAPL could precipitate further declines.
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