Jim Cramer suggests in his opening commentary here on Thursday that Apple Inc. (AAPL) could be hit twice in the trade war between the U.S. and China as the company both sources in China and sells into China. A double whammy. Let's check out the latest and charts and indicators for Apple, which is a holding of Jim's Action Alerts PLUS charitable trust.
In this daily bar chart of AAPL, below, we can see a bullish golden cross earlier this month as the 50-day moving average line crossed above the declining 200-day line. This moving average crossover buy signal is likely to get quickly reversed as the slope of the 50-day line has turned down.
The daily On-Balance-Volume (OBV) line has turned down, telling us that sellers of AAPL have been more aggressive similar to the movement of the line back in October/November. In the lower panel the 12-day price momentum study does not yet show us any slowing in the decline. If the pace of the decline slows it would mean that buyers have started to come in to purchase shares and slow the selloff.
In this weekly bar chart of AAPL, below, we can see some longer-term problems with the price action. Prices were very strong from the middle of 2016 to September 2018, but prices corrected too deeply, in my opinion, in the fourth quarter of last year. The chart would look a lot stronger if the decline stopped at the top of former resistance in the $180 area.
The rally back or rebound this year stopped at the underside of the zenith of July, August and September. Prices are now back below the flat to declining 40-week moving average line. The weekly OBV line shows a second peak at the end of April and the Moving Average Convergence Divergence (MACD) is crossing to the downside for a take-profits sell signal. An outright sell signal may not be too far off.
In this updated Point and Figure chart of AAPL, below, we can see the recent new low for the move down and a downside price target of $153. A decline to $153, should it happen, would increase the likelihood of a test of the early January low.
Bottom line strategy: AAPL could bounce in the short term with some chart support seen in the $175-$170 area from February, but the bigger risk is for further declines in the weeks and months ahead.