Apples Bounces from Key Support

Apple’s slow slide lower accelerated earlier this week after falling through trend line support at 125.

This trend line buoyed prices seven times since mid-March (blue ovals), but the jug can only go to the well so often before it breaks.

Once Apple (Nasdaq: AAPL) broke below 125, it quickly moved to 120 on high volume.

120 is important, because it represents the November and January highs.

It just so happens that the 200-day SMA is just below 120.

The 200-day SMA is the go-to indicator for many investors, which ironically makes it more susceptive to whipsaws.

With or without whipsaw, 120 is an important level to watch.

Another important level (based on the log scale chart) is 116.

In terms of AAPL’s ‘summer to-do-list’, there are open chart gaps at 114.36 and 99.96, which may want to get filled

July 21 is an important date if you’re thinking about buying or selling AAPL. That’s when AAPL releases its earnings (after the bell).

AAPL tends to pop the day after earnings (pink), but that’s not guaranteed. The last all-time high occurred the day after earnings, and it’s been down ever since.

According to UBS, half of AAPL’s revenue growth cames from China. According to FactSet, China accounts for 16.2% of AAPL’s total revenue. Chinese stocks are down 30% since June 5. This could make its way into earnings … and spook investors.

AAPL seasonality suggests being careful in July and early August. Click here for AAPL seasonality chart.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

 

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Under the Hood: S&P 500 Deteriorating

We observed on April 21, that the stock market was actually stronger than the S&P 500 (NYSEArca: SPY) chart led to believe (Article: Under the Hood is more Strength than the S&P 500 Chart Shows).

Subsequently, the S&P 500 moved to a new all-time high on April 27 (2,126.92).

However, this condition of underlying strength quickly morphed into underlying weakness.

The April 26 Profit Radar Report observed this: “Interesting, 1-2 weeks ago, the percentage of NYSE stocks above their 50-day SMA was actually higher than the S&P 500 chart would suggest. Now, the percentage of NYSE (and S&P 500) stocks above their 50-day SMA is visibly lagging the new all-time highs. RSI is also lagging.”

The chart below shows that bearish divergences between the S&P 500 and the percentage of NYSE stocks above their 50-day SMA tend to lead to weakness (only 2 out of 8 corrections since 2014 were not preceded by this divergence).

Although the Nasdaq-100, QQQ and AAPL (Nasdaq: AAPL) staged a bullish breakout (as reported here: Nasdaq QQQ ETF Break out of Bull Flag and here: Fascinating AAPL Formation Telegraphed Bullish Breakout), the Profit Radar Report did not issue an official buy signal for the following reason:

Based on breadth and seasonality, this rally is not built on a solid foundation. Also, the Nasdaq-100 has gapped up 1% to at least a once-year high 50 other times besides Friday. Over the next three sessions, it added to its gains only 38% of the time, averaging a return of 0.6%. Its maximum gain during the next three days averaged +1.3%, the maximum loss -3.2%.”

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The above-mentioned articles warned that: “The trend is up, but lagging breadth and the open chart gap suggest an eventual pullback is likely,” and “In terms of Elliott Wave Theory, any new AAPL high could complete a 5-wave move and result in a larger-scale reversal.

AAPL spiked to a new all-time high on Tuesday (April 28) and has fallen 10 points since.

This week’s down side reversal of the S&P 500, Nasdaq and AAPL after a bullish breakout (according to technical analysis) emphasize why it is helpful to monitor multiple indicators.

That’s why the Profit Radar Report looks at supply & demand, technical analysis, investor sentiment, seasonality and price patterns for a comprehensive outlook.

How a combination of the above indicators is used to spot high probability trades is shown here (with an actual recent example): How to Spot High Probability Setups

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

 

Fascinating AAPL Formation Telegraphed Bullish Breakout

The April 22 Profit Radar Report highlighting this fascination AAPL (Nasdaq: AAPL) formation with the following commentary:

AAPL, the most important stock in the world, hasn’t been able to nudge the S&P, Dow Jones or Nasdaq in either direction. That’s because AAPL is stuck in its own trading range/triangle. The consolidation pattern is similar to that of Q3 2014. AAPL closed at 128.62 today. This mini-breakout increases the odds of more upside.”

 

Below is an update AAPL chart. The next meaningful resistance cluster is around 140, but the open chart gap (and various breadth divergences) allows for a ‘digestive pullback’ at any time. In terms of Elliott Wave Theory, any new high could complete a 5-wave move and result in a larger-scale reversal.

AAPL’s pop also propelled the Nasdaq-100 and PowerShares QQQ ETF (Nasdaq: QQQ) out of a formation called a bull flag. More details here: Nasdaq QQQ ETF Break out of Bull Flag

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

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I Spy … The Most Insightful AAPL Chart

Apple is the most important stock on planet earth.

It’s the biggest component of the S&P 500 (NYSEArca: SPY) and Nasdaq (Nasdaq: QQQ). As of March 18, it will also be part of the Dow Jones, where it will rank as #6 of 30 (at least initially). Not bad for a “newcomer.”

The ebbs and flows of AAPL will affect almost every corner of the stock market universe.

When AAPL coughs, the market will get a cold. What are the odds of AAPL catching a cough?

Historical Dow Jones Curse

Historical data shows that inclusion into the prestigious Dow 30 club is more of a blessing than a course, at least short-term. 9 of the 15 components added since 1999 lost on average 6.3% within the first month.

Technical Blessing?

I invite you to inspect the AAPL chart with me.

Support: Green lines at 120 – 122.

Resistance: The chart only shows one red line, but there are actually two red lines (one going back almost 20 years) converging around 140. Prior to that, there’s black trend channel resistance around 132.

Interpretation: Although the brief spike above the black trend channel (accompanied by a bearish RSI divergence) could be a throw over top, I personally favor higher prices as long as AAPL stays above 120.

This is in conflict with the ‘Dow curse,’ but in harmony with AAPL seasonality (view AAPL seasonality chart here).

Sentiment may also support further AAPL gains, as the iWatch failed to garner much excitement (it’s easier to beat low expectations).

  • Bloomberg: Apple watch is a really poor product
  • MarketWatch: 3 reasons to think twice before buying Apple watch

Summary: Support at 120 – 122 deserves being watched closely. I favor further up side as long as support holds. However, a close below 120 cautions of a deeper correction.

Simon Maierhofer is the publisher of the Profit Radar ReportThe Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Immediate AAPL Down side Risk: 10%

Apple shares (Nasdaq: AAPL) have been flying below the radar. AAPL is moseying around near all-time highs without making a big splash.

The weekly AAPL log scale has the potential to stir up this sea of tranquility.

There is strong support around 100. A look at the daily chart shows an open chart gap at 99.96.

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Chart gaps often act as magnets, and the allure of the gap combined with strong support could cause a 10% correction.

The daily (non-log) chart also shows trend channel support around 106.

The short red line has served as resistance and may continue to do so.

Near-term support is around 106, but failure to hold 106 should lead to 100, which may be a good buying opportunity.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

What the Seasonality Chart Predicts for Apple (AAPL)

Many forces affect the market and individual stocks. Seasonality is one of them. In fact, AAPL seasonality shows a distinct drop in September, which is when AAPL started its 45% decline. Here’s the full seasonality chart.

In September 2012, Apple (NasdaqGS: AAPL) accounted for 20% of the Nasdaq-100 and 5% of the S&P 500 (NYSEArca: SPY).

AAPL was the single most influential stock in the financial universe, the MVP of the Nasdaq and S&P 500.

It was back then when I decided to put together an Apple seasonality chart for Profit Radar Report subscribers. Apple seasonality is based on daily price action going back to 1998, which is the year Steve Jobs came back to U-turn Apple from near bankruptcy to profitability.

Since 1998, AAPL has gone from $1 to $100, so the seasonal bias is distinctively bullish in most months. The biggest exception is September.

AAPL seasonality was one of the reasons why the Profit Radar Report turned bearish on Apple and issued this, at the time shocking recommendation, on September 12, 2012:

“Aggressive investors may short Apple (or buy puts or sell calls) above 700 or with a close below 660.”

AAPL seasonality shows some weakness in mid-July, but projects higher prices from early August to mid-September.

The interesting thing about AAPL seasonality is that it doesn’t really match up with S&P 500 seasonality. The 2012/2013 AAPL bear market has shown that the S&P 500 (SNP: ^GSPC) doesn’t have to move in the same direction as AAPL.

Although AAPL is only 5% away from its all-time high, AAPL lost its dominance. Today AAPL makes up ‘only’ 13.24% of the Nasdaq-100 and only 3.22% of the S&P 500.

That’s because other stocks like Google, Microsoft and Amazon have rallied, while AAPL is trying to recover from its bear market.

Obviously, seasonality is only one factor that affects stocks. Here are five other things to consider about Apple:

3 Reasons Why Apple is a Buy – and 2 Reasons Why Not

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

3 Reasons Why Apple is a Buy — and 2 Reason Why Not

After 18 months in the bear market abyss, Apple is back in vogue again. A rally near the prior pre-split all-time high at 705 has ignited many bullish AAPL calls. Is now a good time to buy Apple (AAPL)?

Apple is within striking distance of its 2012 all-time high (100.72, split adjusted) and iWatch rumors are stoking investors’ imagination.

Is Apple (Nasdaq: AAPL) a buy?

Here are 3 reasons why Apple should move higher and one reason why not.

Time to Buy: Apple is Cheap

Compared to the S&P 500, AAPL is cheap. AAPL is still trading 4% below its September 2012 all-time high.

The S&P 500 is 35% higher today than it was in September 2012 (see S&P 500 / AAPL chart below).

Apple’s P/E (based on forward earnings) is only 13, compared to 15 for the S&P 500.

Time to Buy: Apple’s Got its Mojo Back

After an 18-month, 45% bear market, Apple is catching more positive spotlight (again). Investors and the media are excited about the anticipated release of the iWatch and iPhone 6.

Time to Wait: Overhead Resistance Could Stifle Rally

The all-time high around $100 is an obvious hurdle. Trying to run through a hurdle can be painful. It may make sense to wait until the hurdle is overcome and then use it as a stop-loss level.

Time to Sell: Apple is Hot, too Hot for its own Good

The Apple buy signal is not a hidden secret. Here are just a few headlines from Monday:

  • CNBC: “This chart says Apple’s setting up for a huge move higher”
  • Nasdaq: “Why investors should own Apple now”
  • TheStreet.com: “Why Apple Stock remains a ‘buy’ at the Street”

The last time the media took a bold stand was in May, when it persistently proclaimed a market crash or correction (view a fascinating tale of recent ‘media bloopers’ here).

Time to (almost) Buy: Seasonality

The Profit Radar Report produces hand-crafted seasonality charts for many major indexes. An Apple seasonality chart was made available in 2012, since AAPL accounted for over 20% of the Nasdaq 100 (Nasdaq: QQQ) and over 5% of the S&P 500 (NYSEArca: SPY).

The seasonality chart projected a seasonal high on September 16. AAPL’s all-time high at 705 (pre-split) occurred on September 22.

The seasonality chart also projected a seasonal low in mid-April.

A complimentary look at the full Apple seasonality chart and what’s next for Apple is available here:

AAPL Seasonality Chart

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.