Welcome to the Trader-X blog!

> TRADEthemove.com - my thoughts
> meditationSHIFT (formerly "tad")- just say "om"

Sunday, August 13, 2006

Viewer Mail; indecisive on AAPL

"Trader-X your blog has changed my life! Thanks for sharing and always having great content and analysis. I wanted to ask if you and Tom could take a look at AAPL, especially in light of all the options and other problems they are facing. Tom has posted some great long term analysis of other stocks, and I wanted to get your view of AAPL. Thanks, Jarod"

Jarod - as always, we don't make buy or sell recommendation. We just tell you what we see when we look at the chart. Do your own due diligence and make your own decisions!

AAPL has been facing some serious issues lately, including Friday's delisting warning:

"Apple Computer Inc. said Friday that it would appeal to Nasdaq officials to keep the company's stock listed on the exchange while an investigation into the timing of stock option grants delays the filing of quarterly financial reports."

Here is a weekly chart, with Fibonacci lines plotted based on the low to high of 2005 (thanks TRADEthemove.com). As you can see, price rallied early in the year and reversed above the 1/2-way point between the high and the Fibonacci extension. It then fell all the way to the top of the retracement zone where it promptly bounced (at the end of March). There was a short rally that took it back to just below the 2005 high. The decline resumed, and this time price fell to the 50% mark where it again bounced. So, for 2006 we see a pattern of lower lows and higher highs.

I have also drawn a trendline that dates back to 2004. As you can see, the trendline was broken in early June, but support was found just below it at the retracement zone. Price rallied back to close above the trendline, and Friday's close was right on it.

The overall picture (in my opinion) is bearish; I see no reason to be long...and if I was long I would close out my position. But it is not bearish enough to initiate a short (I would not short a stock above the retracement zone). At this point, I will stand aside and watch to see if AAPL breaks back below the trendline and falls through the retracement zone.

You can find the "long-term analysis" posts Jarod refers to here, here, here, and here!

, , , ,

No comments: