Chart of the Day – AAPL , Talking Numbers Edition

by Enis October 9, 2012 1:10 pm • Commentary

Here’s a preview of what I’ll be discussing on Talking Numbers today between 3:20 and 3:30 pm EST on CNBC:

AAPL headlines galore today.  It’s entered correction territory!  AAPL is cracking!  Supply concerns, demand concerns, margin concerns, concerns, concerns.  First off, everybody calm down.  I’ll start with a couple charts, then sum up my broader view on where AAPL is headed.

Looking shorter-term, AAPL seems due for a bounce.  The stock put in a classic head and shoulders pattern in the past 2 months (Dan actually mentioned this last night on cnbc.com), and the breakdown this week targets the 610 to 620 area.  The stock since March:

 

 

610 also coincides with the 150 day moving average, which has hardly been breached over the past 3 years.  This morning, the stock hit 623, so I think most of the downside move in the near term is over.

The longer term AAPL chart shows serious signs of long term concern though.  AAPL has had many instances of consolidation after breaking out to new highs over the past 3 years.  The 4 year chart:

 

 

I’ve circled with green ovals each period of consolidation following breakouts.  Each subsequent consolidation never convincingly breached the previous highs.

This instance is the first where the prior high was so quickly and convincingly breached on the downside, after the stock initially broke out in August.  Though not shown on the chart, AAPL has also experienced increasing volume on down moves, indicating longer term distribution.  That is another unique feature of the past 6 months of price action.

I think AAPL’s 4 year bull run has come to an end.  The short-term picture indicates an imminent bounce, but the AAPL fanbois are in for a rude awakening if they expect the stock to act as it has the past few years.