Hey Mac, wanna buy some Apple?

AAPL

 

 

Should investors consider a position in AAPL now that it’s been kicked in the teeth? Let’s take a look at the chart and see where it stands technically. Here are my observations:

 

  • The stock has moved quite nicely through two cycles of the 4 market phases –please refer to my book Sideways for more information on identifying the phases and how to trade them. We are clearly in phase 4 downtrend at this time.
  • Leading the phase 4 downtrend is the break below the 200 day MA and successive lower highs.
  • Fairly significant support resides around $93, as indicated by my horizontal dashed green line. This level has been tested several times, and suggests some failure of the phase 4 downtrend noted above—the lows have not been getting lower.
  • MACD and RSI have trended down with the stock’s decline. Both diverged against Apple’s flat highs in the late 2014, early 2015 period—particularly RSI.
  • Moneyflow has been flat since late 2014
  • Stochastics, not surprisingly, is hooking down.

 

 

My thoughts: If $93/sh.  holds over the next week, this may be a trading opportunity. Not an investment – a trade—and that comes with a difference in mentality and risk tolerance, should you choose to play such a trade.

The stock will need to take out its last high of $110 to be considered safely out of its down trend. However, a bounce off of $93 support could carry it anywhere near that area. You wouldn’t want to buy until $93 is proven that it won’t be broken, and that’s going to take at least a week or two to prove valid. I’d rather buy this stock at $95 or $96 to trade a more likely swing upwards.

9 Comments

  • Hi Richards,

    Thanks for for sharing you insights on Apple and providing you technical analysis. I was hoping you would cover this stock.

    Can you please comments if it’s still good time to get position on HUV.TO VIX hoping market has some room to correct.

    Thank a lot again for providing your technical analysis.

    Harj

    Reply
    • I own VIX via the HUV units for 5% of our equity platform, with an eye on about VIX level of 18 + to sell.
      Be aware of the negative effects of contango if you enter this type of vehicle. See my past comments on this subject or Google the term to understand it.

      Reply
  • According to CNBC today Warren buffet says active investing is certain to lead to less than average returns.

    Reply
    • Most active investors underperfrom. But also most bike racers don’t win races, most golfers are at par +/- a bit, most people earn less than $200k/year, most students gets B’s and C’s, the average man is 5’10, etc etc etc.
      Warren Buffett is an active investor – and he has beaten the market (although not every year). So too have many active managers. But, like yellow-jersey bike racers and PGA golfers, they are the top tie–not the middle runners. And also, like most athletes, there are periods of underperformance. But in the long run, a system that is based on logic will beat the market.

      Reply
      • Oh–I forgot to add–active management can also be about lowering volatility–so an active manager who perhaps stays near market returns but experiences less downside during crashes like 2008 add value–this is because if you began investing in 2007 or 1999, an index investor may – had they stayed in–have eventually made money. The reality was they were often wanting to sell out low in a panic– but the active investor who exercises an early sell strategy may have helped that investor remain calm and not bail out via their lower downside.

        26 years of doing this and I have seen the truth –that is, in every case, no exceptions, when a real crash happens, most investors always think its never going back up–every single time. The 3 major crashes in my career proved this (Asian contagion, tech bubble, sub-prime implosion). Each time, investors felt that circumstances had changed enough to warrant a new age of never rising stock markets and a future of lower low levels. For this reason, if you have a strategy to sell you out after say 15% of downside, you may not outperform because you delay a return back in at the bottom. You may even over the long run underperform. But you still outperform most investors – because you didn’t bail low, buy back in high–which the smart/dumb money scorecards show us happen with incredible regularity.

        Reply
  • Hello Keith . Thanks for your information on AAPL. I would appreciate your thoughts on this week’s announcement on the BCE Acquisition of MBT @ $40/share. The current price of MBT is about $2.75 discounted per share to the offer. I suspect the market is holding back contingent on whether the Feds will be different than the previous government and say its okay now to have 3 carriers vs the preferred 4 carrier model for western Canada. Any thoughts on risk reward at this juncture, or is it just too earlier right now to jump in?

    Reply
    • The individual stock questions not covered on a blog are best asked on BNN. Having said that–guessing at the regulatory decisions is a mugs game–charts cant predict that sort of stuff. We own BCE and like it, but not sure if we would bet on the MBT deal–it would be great if it happened, but you’ve got a left wing orientated government in power now who may or may not like to have this sort of merger approved. Hard to call this, sorry I cant offer much insight.

      Reply
  • Hi Keith, are you still looking at this trade, AAPL did go bellow 93 here and there. If you’re still looking at it, in case of going for the trade, what timeframe would you expect for it to play out. Would you hold for a month 2 or 3 months?

    Reply
    • I dint own AAPL. The stock can slip below $93 marginally–support or resistance prices are “approximations” . My message is and was: If AAPL breaks $93 (by a reasonable amount–say $1 or more) it may be in danger. If AAPL bounces off of $93 and moves reasonably higher – again at least $1 –preferably more–it may be a fair upside risk/reward bet.

      Reply

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