Apple Inc. (AAPL) is a leadership stock. Not just from its weighting in various market indices and ETFs but also from a product and management viewpoint. Everyone is interested in its next new product or development or improvement. Apple became so much of a leader that Warren Buffett finally became a big investor.
Despite this coveted position, AAPL made a price peak in early October around $230 and rapidly skidded down to around $170. Former fundamental champions of the stock changed their tune and downgraded their ratings as the stock price backed up. Wall Street is such a fair weather friend -- just like our trading partners.
Let's check out the charts and indicators this morning to see if we can make a year-end rebound to give some temporary to some investors who road the stock lower the past two months.
In the daily candlestick chart of AAPL, below, we have little in the way of positives. Prices are in a downtrend from early October and I do not yet see a reversal pattern. AAPL is below the declining 50-day moving average line and below the cresting 200-day line.
The daily On-Balance-Volume (OBV) line shows a peak back in September and a lower high in early October when prices made a higher high giving us a bearish divergence or negative divergence. The 12-day price momentum study is the only bright spot for traders. Price momentum has slowed from November to early December while prices made lower lows. This is a bullish divergence. This is not a big divergence but it may be just enough to give AAPL the holiday spirit for the short-run.
In the weekly candlestick chart of Action Alerts PLUS holding AAPL, below, we have a mixed to bearish picture. No quick turning candle patterns signaling a reversal yet. Prices are below the flat 40-week moving average line. The good news here is that the slope of the line has not (yet) turned negative. The weekly OBV line shows a big decline suggesting there has been some significant selling and liquidation.
In the lower panel is the weekly Moving Average Convergence Divergence (MACD) oscillator. In October this oscillator crossed to the downside for a take profits sell signal. The oscillator is poised to cross the zero line for an outright sell signal.
In this Point and Figure chart of AAPL, below, we have a couple of positives. Prices have meet a downside price target but that does not mean it can't go lower. On the left side of the chart is the volume at price bars, which shows there has been a good amount of trading around the current level and this could be support.
Bottom-line strategy: The charts and indicators of AAPL are mostly bearish but prices are in an area of support and price momentum has slowed from November to December. Is this enough to spark a bounce or rally into year-end? Maybe is my answer. Only experienced and nimble traders should play from the long side.