Bears Breach Apple’s (AAPL) 200-day

We posted yesterday how important Apple’s 200-day moving average is/was.

We noted, “It’s been the dike that has kept the Bear Sea at bay ,” since the bull run started in March 2009. Here’s an excerpt,

Apple’s stock managed an impressive bounce off the its 200-day moving average yesterday. It was the first time the stock has come within $1.00 of the 200-day since November 2011 and only the third time in the past three years. *

In fact, AAPL has only moved below its 200-day moving average twice sense the crash lows, closing only seven times under the 200-day since it crossed over in early April 2009. Of those, six took place in the June 2011 streak.

Yesterday, for the first time since last November, Apple’s stock closed below its 200-day moving average. The breach at around 1 pm eastern took the rest of the equity market with it (see chart).

Where now?

Wish we knew, but it’s unlikely, in our opinion, we have the V bottom that took place last November, when the stock spent only one day under the 200-day. The concerns about innovation and whether the company has jumped the shark with the iPad mini are more structural and, seems to us, need some time to be resolved in investors minds.

The stock is still up huge for the year with a Jackie Robinson-esque return of 42.42% and could face capital gains selling if the President is reelected on Tuesday. It’s also unlikely traders will step in to catch the falling knife until the stock stabilizes and moves back and closes decisively above the 200-day.

We can’t recall the last time Apple has been this oversold with a 20 handle RSI. This would be an opportune time for Apple to put some of its $100 billion plus cash to work to help stabilize the stock. Get with it, T.C.!

We could be wrong and always remain flexible. Stay tuned.

(click to enlarge)

(click to enlarge)

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