Chart of the Day – $AAPL vs. $BBRY, Take 2

by Enis March 12, 2013 12:43 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:

I debated the merits of these 2 stocks 6 weeks ago on the same segment.  At the time, I preferred AAPL over BBRY, with my full thoughts posted.  Since then, both stocks are down a bit more than 5%, significantly underperforming the broader market.

I’ve been looking for a good bounce setup in AAPL ever since its post-earnings collapse to 435.  I put on one long call spread trade that I quickly took off when AAPL failed to show much strength, and have been on the sidelines ever since.  But I still think the longer-term picture for AAPL shows a stock in the process of forming a bottom.

This is a 3 year daily chart of AAPL:

[caption id="attachment_23556" align="alignnone" width="629"]3 year daily chart of AAPL, courtesy of Bloomberg 3 year daily chart of AAPL, courtesy of Bloomberg[/caption]


I’ve drawn 2 red lines to indicate the important long-term support for the stock.  While the 500 level got a lot of attention as a nice round figure, the 400 level is much more important from a historical perspective for AAPL.  The 400-425 area served as resistance in 2011, and a lot of market memory lies in that area from the extensive trading volume that took place.

In addition, I’ve included the 50 day moving average on the chart to show that the stock has not touched its 50 day moving average in 5 months, quite a long time for any stock, no matter the strength of the uptrend or downtrend.  AAPL is still in a downtrend by that measure, but on a longer-term perspective, it is still above long-term support.  I want to give the stock a bit more time, but the risk/reward favors bullish trades at these levels.
In contrast to AAPL, BBRY is in a short-term uptrend within a long-term downtrend.
This is a 3 year chart of BBRY:
[caption id="attachment_23557" align="alignnone" width="634"]3 year daily chart of BBRY, Courtesy of Bloomberg 3 year daily chart of BBRY, Courtesy of Bloomberg[/caption]
I am relatively neutral on BBRY here, but rallies into the high teens are selling opportunities, as the 18-20 area is long-term resistance, as shown by the two red lines.  In the short-term, the stock has been stuck between the 12 and 16 levels for the past month, and earnings at the end of March might be the catalyst to break the range.