First a few words about my methods of analyzing stock charts. As the title of this blog suggests, I mainly focus on weekly stock charts to identify areas of support and resistance areas (which I draw as boxes for convenience). I trade those boxes based on the teachings of trend-following with a pinch of Darvas box theory and Alexander Elder layered on top. If that last sentence made absolutely no sense, might I suggest reading 3 books as background: Michael Covel's "Trend Following" and Nicholas Darvas' "How I Made $2M in the Stock Market" and any of the books by Alexander Elder. Or just follow along with my posts and you'll see how I do things.
Too many people have given up Apple for dead....and it's not quite dead yet!
As the chart below illustrates, there's some bullish divergences between the FORCE index and price (FORCE is making a higher low while price made a lower low). Elder Impulse bars are blue (neutral) - which is infinitely better than red (if you're bullish). Resistance is at 478.81 (the top of the blue box).
So, the million dollar question is can it actually make it to that high of 478.81?
Maybe not, but I'm still playing for a bounce. Here's why:
- Bullish divergence in FORCE index
- FORCE index is green (positive).
- Bouncing off resistance (now support) from Oct 10th 2011 weekly high of 422.
- Sentiment has become too negative after 6 months of going down
On the negative ledger, you have the following to contend with:
- Trend is still down (5EMA is lower than 10EMA), shaded red on the chart.
- No higher highs printed yet
- Price is below 5EMA
- Volume on weak bounces remains correspondingly weak.
Taken together, I think the odds for a small bullish bounce are better than 50% and certainly better than any time since September 2012, but I wouldn't count on tagging the 478.81 high just yet.
I'll revisit AAPL in a few weeks to see how it all plays out.
For more charts and disclaimer, feel free to check out my public stockcharts list:
My StockCharts Public Stock List
*** This blog post is for informational and educational purposes only and should not be misconstrued as investment advice. ***
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