Chart of the Day – AAPL iCharts

by Enis July 24, 2012 7:58 am • Commentary

Today is a special, early Chart of the Day.  AAPL reports after the close, and here is a quick round up of the interesting AAPL charts:

Over the last 3 years, AAPL has been in a pattern of breakout, consolidation, breakout, consolidation, and so on.  I’ve highlighted the breakouts with a green box, and the consolidation with a red box:


The consolidation periods (ranging from 4-7 months) have been longer than the breakout periods (ranging from 1-3 months).  During the consolidation period, the stock has rarely traded below the highs of the previous consolidation period.  And the current breakout has been the strongest, trading further from the highs of the previous consolidation period than any other breakout.  If this pattern holds, then AAPL probably has a few more months of consolidation ahead of it.

The size and speed of the most recent breakout are a bit of cause for concern on a longer-term basis, though AAPL has been an exceptional stock for many years, so it might continue to be the exception.  From 2009 to the start of 2012, AAPL traded in a very orderly up channel, as shown here:



I actually view it as positive that AAPL has held above the breakout of the trend channel for a few months now.  If the high in April was an emotional top, you would usually see the stock quickly sell off back into the channel (like GOOG in 2007 or GLD in 2011).  The ability to hold the breakout in AAPL, even after a parabolic move, shows that there are still incremental buyers.

Finally, the 1 year chart basically shows the extremely strong momentum of the up move from Jan-Mar (high RSI circled with an oval):



The past few months are working off that overbought condition, but still holding above the 100 and 200 day moving average over that entire period.  It’s another picture of consolidation.  The charts show a neutral stance for AAPL within a longer-term uptrend, and I might play for continued near-term consolidation with an options trade today.