Chart of the Day – $AAPL for Talking Numbers

by Enis January 11, 2013 12:25 pm • Commentary

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

AAPL has been stuck between 500 and 550 for more than a month now.  It’s made a few attempts in each direction, but with no resolution.  We’re likely approaching decision time, so which way does it break next, above 550 or below 500?

Corey Rosenbloom at the blog had a good analysis of AAPL’s chart structure, and my take here is similar.  Here is a 1 year chart of AAPL:


Screen Shot 2013-01-11 at 12.00.06 PM



I’ve drawn a horizontal red line at the all-important $500 support level.  The purple line shows the 50 day moving average, and I’ve highlighted with green circles the 3 times over the past 3 months where the 50 day ma has acted as resistance.

The 50 day moving average is now around the 550 level, which is the main resistance level here as well.  While I’m somewhat neutral in this range, my inclination is that AAPL is more likely to break below $500 rather than above $550.

Here’s the tie-breaking chart:


Screen Shot 2013-01-11 at 12.00.27 PM



This is a 6 month chart of SPY (orange) vs. AAPL (black), which shows the divergent paths of the two assets since the beginning of December.  In my view, if AAPL cannot move higher when the broader stock market has ample demand, then it’s more likely to come under pressure on the slightest hint of weakness in the broader market.  In that regard, a break of $500 seems quite possible on the next SPY pullback.

I would get interested on the long side in AAPL if it broke $500 in a panic on capitulation-type selling.  Until then, I don’t see a good risk/reward trade in either direction in AAPL at current prices.