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Apple in the Carnage - GTLackey's RPM

Apple in the Carnage

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Apple in the Carnage

Of course, Apple stock $AAPL gets plenty of coverage in the markets so usually it is well enough left alone, but looking through charts this weekend it struck me how well it held up during the recent waterfall, so I wanted to look closer.  Let’s look at 6 charts, 3 daily and 3 weekly that paint a decent picture of opportunity in $AAPL here if the markets can expand on this bounce.  There is even a chance for a new breakout if it gets enough momentum off these lows.  As with any trade plan you need to accept the risk plan before you start and structure things accordingly, which also sits pretty well here just a under 5% below current levels if generous, and a few spots to go even tighter.

Starting with the weekly charts we can see that the up trend line off the April lows while steep did hold on 1st approach this week. The bounce off the lows was enough to just keep the close in the upper STDev channel which is your sweet spot.  It is a little shaky though when it penetrates that much intra-week, but lets see where it goes. Overall the Bollinger bands are still rising and even potentially expanding, so it doesn’t look there was much price damage in the name by the end of the week.

We did see a good amount of volume this week showing the battle that took place. On the next chart you can see that volume surge better and fall in the  weekly OBV, but that indicator is still holding above the May breakout zone. While we are on volume, you can see this action happened near the bottom the VaP zone signified by the red line across the chart which also happens to be the bottom of the congestion zone and where the 13ema (yellow) showed up this week.  Apple ended closing not only above the 13ema, but made it all the way back above the 8ema both of which continue to rise as do most other moving averages on this chart.

Looking here, it seems pretty clear if we lose around 214 on weekly close it opens up the Kirby (volume vacuum or pocket) down to 190 area and then 170ish after that, so we don’t want to start that potential for a cascade.  It would be better to hold up here and not tempt things. The final weekly chart is the Cloud chart which is also continuing to point higher and not narrowing for now, but note the cloud support here a good bit lower.  It is not going to help all that much in the short term other than if the selloff continues and then we can look for longer support probably closer to that 190 areas unless it is an all out collapse, but not seeing signs of that here.

As we drill down to the daily we can see more about how this could potentially be traded and what levels look important. We start with the RSI chart which shows the daily held the RSI bull range low level of 40 almost exactly adn turned higher on Friday.  This is a solid start and was after Thursday’s high volume inverted hammer that stopped right at where I put the range low here.  Friday it gapped up and held onto those gains into the end of the day.  This also helped flatten the MACD and potential for a turn. Volume was not higher than Thursday but still over the 10day average on this chart

Moving into the volume indicators on the daily view below you can see the OBV is bouncing off the September lows as price test the red line that marks the last big VaP bar before the vacuum starts that goes down to around 208 and then and even larger VaP vacuum (definite Kirby) to the largest bar around 190 which is all the way back at the 200sma roughly 15% lower.  Along the way you have a gap near 210, which is why I thought that might be a decent close under stop for Intermediate to longer term trades in case this works.  And if you are a faster trader you could use a close under in the 216.5 zone just under the line with a hard stop below Thursday’s lows to prevent any big damage.

Again, it is not our goal to see the lows taken out since our trade plan is for it to hold here and move back higher, but there is an opportunity to flip into puts or short if we do start losing them. Ultimate goal if that were to happen would be the big gap down at 190 with the VaP bar right there to provide some support, but let’s not get ahead of ourselves here.

One final piece of support is the daily cloud chart where price stopped right at the top of the cloud in Wednesday’s big candle, gapped down below it Thursday and put in a doji before reversing Friday with a gap back higher out of the cloud.  This looks like a strong exit from the cloud and favors continuation at least in the short term.  Many like to look at the bottom of the cloud for support which is currently around 206 and rising under price pretty well.  So if we hold up a few more days it could be used as a close under stop for those who are watching daily.

I was prompted to look closer at $AAPL and other mega caps like $AMZN $FB $GOOGL and a few other from a conversation about leadership on social media. Which of all these start falling hard, it will definitely be a difficult weight to overcome, but not impossible. Currently,  the others look good or bad on their own characteristics, but $AAPL caught my eye as a fairly tight technical setup with multiple good stop areas for various trading styles; and a pretty good list of positive price action in the last couple of days during the markets swoon.  It is a name that is not particularly expensive when it comes to earnings metrics and Its options flow did get a couple of call sales in the last few days that put resistance above near 130 and 135, there is plenty of bullish notable call flow sitting from the last few months that can help fuel any breakout if the failed break down does propel this thing higher.

$AAPL may have paused over the last 6 weeks or so, but I have a hard time saying this one has lost its longer term trend or even leadership in tech over the this time period.  However, if (very big IF right here) we start breaking these levels I am fine changing my mind and think it could (but doesn’t have to) weigh a good bit on the markets as a whole due to size, so a quick short or put play here could work well.

Good Luck and I hope this helps!

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(All market data above are derived from Stockcharts.com, Esignal, and Reutersdatalink)
The information set forth here was obtained from sources which we believe to be reliable, but we do not guarantee its accuracy.  Neither the information, nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities or commodities. I or my affiliates may hold positions or other interests in securities mentioned in the blog.  Full Disclaimer
There is no guarantee that the views expressed in this communication will become reality,  Investing in the stock market involves risk and potential loss of principal, Investment strategies should be thoroughly researched and understood before implementing and none of this should be construed as a recommendation

About Author

Tommy

is a Chartered Market Technician (CMT) and Certified Financial Planner (CFPr) in Greensboro Georgia (Outside Atlanta). Founding partner of Barber Lackey Financial Group, LLC, a Registered Investment Advisor. However, this blog is not affiliated with BLFG and does not make recommendations to buy sell or hold any securities.

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