AAPL Inflection Point

In the very recent update on AAPL, we opined that the trend on the stock appeared intact and unless some indicators showed divergence, we would have to default to being long.  In the weeks since, we’ve observed some interesting price action on this stock shown by the charts following.

(charts by stockcharts.com)

Quite a few momentum indicators are not in sync with those of a number of other leading stocks, nor of the market in general.  For example, we show AMZN and GOOG, both significant market bell weathers in the charts below:

We can observe that the momentum indicators that I follow are confirming the prices of the Dow Industrials, AMZN and GOOG whereas AAPL shows divergences at recent highs. This could be the issue of rotation that we have discussed in earlier postings, but since AAPL is such an influential market component, its trading behavior bears watching as it most certainly affects psychology.

Further adding to some caution for AAPL is the point and figure chart which shows that the price action has taken out the recent level of support.

It’s been a long time since AAPL has shown any break of support during its powerful uptrend. In summary, AAPL may not be a buy on this dip.  To be clear, the uptrend has been long and powerful and there is not enough evidence to conclude that a bear market has started.  Price is so far above the weekly moving averages that even a move down to $150 may not be bearish.  However, the price action will have to move sideways at the very least for an extended period of time in order for the momentum indicators to become less ominous.  In any event, based on what I see today, I would avoid AAPL  since it appears to have lost some momentum.  More importantly, we need to be vigilant of the action in the other leading stocks.

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