Apple Inc. (AAPL) saw its shares decline in early Monday trading following reports that the tech giant could see a 6-million-unit gap in iPhone production due to disruptions at its key China manufacturing plant as Covid protests spread throughout China.
Let's check and see how Apple's charts may fare in light of this development.
In this daily bar chart of AAPL, below, we can see that prices are trading below the declining 200-day moving average line. Prices closed last Friday above the bottoming 50-day moving average line but the pre-market pricing will show that AAPL is now below the 50-day line. The trading volume has been more active the past three months and tells me that there may be a shift in ownership. The daily On-Balance-Volume (OBV) line shows weakness from the middle of August and the Moving Average Convergence Divergence (MACD) oscillator is right at the zero line, but weakness on Monday could turn this indicator lower.
In this weekly Japanese candlestick chart of AAPL, below, we see a negative-looking chart. Prices are below the declining 40-week moving average line, so we know that math tells us the trend is down. There are some upper shadows at the intersection of the 40-week line. The OBV line shows us a peak back in February. The MACD oscillator is below the zero line but trying for a cover shorts buy signal.
In this daily Point and Figure chart of AAPL, below, we can see a potential downside price target in the $115 area.
In this weekly Point and Figure chart of AAPL, below, we used a five-box reversal filter. Here the chart shows us a price target of $245, but a trade at $133.94 could turn this chart bearish.
Bottom line strategy: Like many people who are market watchers I keep CNBC on in my home office but the sound is way down. A parade of analysts have been on the program this Monday morning and none of them truly knows what is happening in China because of the government's censorship there. My fear is that these protests will be more serious than the April 1989 protests but I have no special information. In this environment the charts are the best source of information. For traders the risk is to the downside and a break of the $135 level is the key area to focus upon.
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