Another trader's view on AAPL stock
If you missed the last rally in May and then in last July, here is another potential opportunity for a rally. AAPL has dropped nearly 20% from its all-time high of $705.07 to $547.06. From a weekly chart, it just dipped under the 20 DMA, which it hasn't done since June 2011. Volume looks to be high last week and it doesn't help the bulls that it is a bloody red candle.
Many of us attribute this to people taking profits because of the eminent increases in capital gain taxes in 2013. But, I don't buy that. Why not just wait till the end of the year for that? If you own AAPL, more likely than not you are up, which would rule out the fact that you would be selling at a loss. If you are trying to avoid the wash-sale rule, then I suppose it would make some sense to sell now and wait a month before buying it back. I digress.
We can see from the chart, even though volume was heavy last week, there were other days that it was heavier this year. Notably in mid-April and early March. From August through mid-September, you could have seen that this rally was weak by the volume. Without a doubt this decline in the past month and few weeks has been significant.
Where do you see support?
The most obviously test of support would be at 525. If it breaks through that then we are in for a very wild ride because you don't see anything until 425. This was a resistance level in late-October of 2011 and a level we haven't seen since January of 2012. Of course this is from a weekly chart perspective. From daily view, the support levels are not as strong. We see some support at 500, but this is very weak.
Are we gambling here by picking a bottom on Apple stock?
Yes, ideally, I would say wait for it to form some kind of base or show some kind of reversal before entering. Preferably something that hits 560 or what not. But, at the same time you would risk the potential huge move it could make on Monday.
There have been a lot of news articles on how AAPL is lacking in innovation or is being seriously challenged by Samsung and other Android devices. Litigation issues, Apple Maps, and firing of key employees have plastered the headlines. From a technical perspective, consider this drop in price to be a gift. Just like it was a gift to buy this stock at 525 back in late May.
Disclaimer: Article is written for informational purposes. It isn't intended as investment advice.
Disclosure: I have a position in AAPL.
Labels: Featured Stocks, Finances