Why APPLE (AAPL) ?

Why would anyone want to own Apple (AAPL) for anything more than a quick bounce trade? Take a look at these charts.

First we have a pennant/triangle consolidation pattern that has formed marked by the red trend lines. They typically resolve in the direction of the trend preceding them, which in this case is down and it is near the point of a breakout.


Here is my long crossover setup, read the last post to understand what the rules are and how it works. there's no signal whatsoever to go long. In fact, it is missing 1 component of 3 to be a short.



Now take a look at this 5-day chart. Note how both green RSI and my super long stochastics both called a top with negative divergences at the retest of the highs May-June 2008. Finally look where our consolidation pattern sits in the big picture, under a huge zone of overhead resistance or supply. There are plenty of sellers there to keep this stock suppressed and it looks like they are ready to start selling again.


Nothing goes straight up or down and I mentioned there may be a quick long trade here. I think there's a good possibility we see a false breakout above the upper line of resistance on the triangle (red) in picture 1 and 2. A False breakout would add all the energy the bears need to waterfall AAPL in a massive sell-off.

Looking at this 15 minute 3C chart (orange) again, see my previous post to see how it works and how you can try it. You can see the indicator made a positive divergence at A calling the upside reversal, a negative divergence at B calling the downside sell-off and now at C we have another positive divergence calling a bounce, which is why I think a false breakout is likely.


To fine tune our analysis of 3C, look at this yellow 1-min chart and you can clearly see as AAPL was making lower lows even from yesterday around 2 p.m. on this chart, but look at the direction of 3C-it's heading higher signaling accumulation. My guess is market makers are stocking up to sell on the bounce and then short on the false breakout around the $114.25 area, which coincides with resistance that may very well be felt at the down sloping yellow 50 bar moving average.


So if you are a quick-on-your-feet trader, there's a possibility to make 15 or 15% in the next few days, but after that, the path of least resistance is down.

I'm not a clairvoyant, I use technical analysis to make the best decisions I can make with the current evidence. So can I be wrong? Of course and it won't bother me one bit as long as I exercise discipline in my stops when I'm wrong. However, technical analysis is about being impartial and putting the odds in your favor. When you look at all of the evidence presented, the odds are not in favor of continued upside north of the $125 area. the odds are stacked toward a decline that may reach $35-$50 ultimately. The topside distribution pattern suggests a move toward $33!!! I know, it sounds insane, it's a crazy idea, an 84% decline? However, the Q's in our last bear market saw about an 82% decline from their 2000 high to their 2002 lows and that's an index! So as unlikely as it seems, it's a possibility.



Be careful with Apple-and maybe, just maybe-make a killing!