Here’s a preview of what I’ll be discussing on Talking Numbers today around 3:20 to 3:30 pm EST on CNBC:
With AAPL on the tip of everyone’s tongue, I’m going to revisit the AAPL chart today. I laid out last month why I thought AAPL had made a long-term top, but today I want to detail why we might be close to a short-term bounce.
First, the weekly chart of AAPL since the start of the bull market:
I’ve drawn the trend channel that AAPL respected so well from 2009 to the start of 2012. It was a healthy uptrend that exhibited no signs of euphoria. However, the stock started to go parabolic in February, and broke outside of the trend channel, a much more unhealthy form of appreciation on a long-term basis. The stock has spent the last 9 months outside of the trend channel (circled in red), but its recent selloff has finally brought it close to that long-term trend. I think AAPL’s selloff is close to done, and risk/reward of buying the stock here is much better than it has been in the past 9 months, but I view one last move lower back into the trend channel as a distinct possibility.
Contrast AAPL’s bull market chart with JCP during the same time period:
I’ve drawn the red line at the important 19-20 support level, where it bounced from this morning. This is a 40% short interest name with a lot of bad news priced in, so I think it could bounce as well.
However, I’m more confident that AAPL is close to a bounce because of its longer-term strength. But you might get one final washout before this selloff is over.