Wednesday, January 25, 2012

Charting Apple (AAPL) - Resistance is Strong

I love AAPL and all its products, but all good things must come to an end (or at least a pause at some point). I'm not saying here and now AAPL turns for good or anything like that, but in the next year or so the charts say that the run will end or at least finally begin the topping process.

The argument for this being a blow off top and a near term turn to come is pretty strong technically. (Note this fits with the supposedly impending slide in the equity markets.) Last week I posted Is Apple (AAPL) Headed For a 50% Haircut? where I warned to wait thru earnings to make any decisions. Well now earnings has come and gone, so is it time to make a big boy decision?

Looking at the charts -

AAPL Daily - Now the daily chart is setting a double negative divergence while price spiked right to and stopped at upper diagonal (black) resistance). Double negs on a daily are never good.

AAPL Weekly - Want a channel view? Want to see price nail upper channel resistance and reverse on the spot today? There you have it. Want to see something telling? Look at the weekly MFI falling off a cliff and the divergences indicating this run is not all that as well.

AAPL Monthly - One giant rising wedge that has price accelerating and consolidating at the top. The wedge runs to about mid 2013, but these things rarely play out to the very end. Those two green target areas that don't look "too bad" at first glance. The ones that look like likely support areas at fib retracements - the first one is at 280 and the second goes as low as 200. Hello!

AAPL is a beast. As stated I love their products and they are life changing. Lord knows how many iProducts my family has owned and will continue to. Bottom line is they will eventually at some time saturate the market and the growth will go away. At that point they become another Microsoft if they do not diversify or create (unlikely with Jobs gone) some sort of new technology. With the cash they have they could do anything.

Bottom line is AAPL is not immune to broader market and economic conditions and the Christmas earnings blow out may be a fadeable event. Markets are set to implode (if the Fed allows it). The consumer is struggling (but apparently finding room in the budget for the one necessity (an iProduct).  I really think a move to $355 here is quite possible if broader market conditions weaken as they are expected to. Worse is possible if all the stars align, but let's not get too far ahead of things just yet.

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