Watching Apple (AAPL) to Gauge the Market

In the last couple of days I was a little concerned about the relative weakness in Apple (AAPL) as the market had a two-day bounce back, which was discussed in my Morning Calls and Daily Notes.. Typically AAPL leads the market and does not show a negative divergence, which put us on an alert to sell some longs and potentially look for some kind of momentum short. Yesterday, while the DOW was up around 180 points, AAPL was dancing around the 10-day MA which is unusual for that stock. I have also outlined a 5-day 5-min chart with a Head and Shoulders topping pattern that was forming with the neckline right around the 10-day MA, which gave a measured move down to the $605 level.

(click to enlarge)

So here we are now, AAPL is trading around $610, already meeting our measured move of the pattern. It has also broken the 20-day MA for the first time since it Dec. 19th 2011. Traders will be watching today to see if it reclaims the 20-day or rejects it. A close below the 20-day would be another bearish signal for the stock market. Next week we will use today’s low as the new reference point. The 50-day MA is far away at this time, standing at $556.57, and the last time we saw the 50-day MA was Dec. 20th, 2011.

(click to enlarge)

AAPL is currently 5% from its highs and could see some form of snapback in the next couple of days, especially after 4-days of selling. It will be key to see how AAPL snaps back to judge the overall weakness or strength of this stock. I hope you were all listening to Evan Lazarus on the radio today as he was all over this trade. Nice Job!

Disclosure: Scott J, Redler is LONG: DNKN, RENN, ZNGA, GLD, CF. SHORT: SPY

About Scott Redler 367 Articles

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader.

Mr. Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Mr. Redler moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, continued to trade actively while working closely with all traders in the firm to dramatically increase performance.

Mr. Redler has participated in more than 30 triathlons and one IronMan, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business, Bloomberg, and he is a regular contributor to Minyanville and Forbes’ Intelligent Investing blog. He has been quoted in the Wall Street Journal and Investor's Business Daily, among other publications.

Scott received a B.B.A. in Marketing/Finance from the State University of New York at Albany, graduating Magna Cum Laude from Albany's School of Business.

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2 Comments on Watching Apple (AAPL) to Gauge the Market

  1. Oh my all those pretty pictures. So sad they mean nothing. If you’d like connect the dots to $650.00 by April 25th.

  2. Chartists focus too much on…. charts. I don’t think I’ve ever experienced AAPL actually moving in a direction that chartists claim it will. It moves off of news more-so than anything on the short term patterns, and fundamentals on the long term patterns.

    Of course, Earnings are Tuesday the 17th, so typically AAPL will be trading at a new high going into Earnings. Of course, this isn’t guaranteed, but Earnings WILL be the big driver of AAPL in the near term, not charts.

    Get your heads out of the charts. :)

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