THE PROBLEM WITH AAPL

AAPL is one of the companies that the bulls have and will continue to expend their firepower, it's a market fulcrum. Here's the problem I see with owning AAPL, especially for the long haul and this really is a microcosm of the market. First, this is a weekly chart and I recommend anyone thinking about making long term commitments in this market (i.e. thinking you are buying a bottom) to take a look at the bigger picture. Note on this chart a few things: A) Take a look at the volume that dumped right around Jan '08. AAPL found some support around $115, but then B) look at the advancing rally from there and note the diminished volume. C) Come Sept, the volume really picked up as the $145 area was taken out and at this point, the second hump of our camel's back looks a lot like a rounding top with the volume matching. So now we have some major resistance in that $115-$117 level (remember, once support is broken, it becomes resistance) and a lot of overhead supply. Based on the pattern, I don't even want to tell you what the downside target looks like. There is some support around $75 and I think that area will be visited before AAPL makes a bottom. It could turn out to be a $50 stock. It's not just the technicals, but AAPL has to be a huge holding in the many funds that are liquidating their portfolios.



Next we have my trend channel in blue, if you are a TeleChart user and would like the formula, email me-if not, then click this link and try it free for 30 days. The idea here is a close above the top channel would end the downtrend for me, which isn't to say it goes up, just ends the DT for the time being. We haven't seen that close yet, but the channel has flattened out and widened. I suspect we'll see a move above the channel shortly.



Finally, my "Bollinger Pride Bands". I think INO TV has a video seminar of John Bollinger, it's probably one of the ones you can watch for free. If you look back, you'll see AAPL tends to bounce between the blue channel, that is somewhere around $120 right now. I'm thinking it hits about $115 by the time AAPL makes a move and that puts us right there at the overhead supply/major resistance level. It all depends on what volume looks like on the potential rally. Does volume expand or contract. If volume contracts, then AAPL will make a fabulous short around $115. If it expands, then we'll e writing a new post with a fresh set of eyes, but for now, AAPL looks like it could rally a decent $15 points or so, but from there, it doesn't look too promising.

If we look at AAPL the way Technical Analysis was meant to look at it, then we have to say this is a bear flag and again, I won't give the downside target because I don't want to be laughed out of the room and lose all credibility with you, but suffice it to say, it's considerably lower.