apple inc aapl coming closeat capitulation for potential bullish reversal 971882015

 

(Click to enlarge charts)

In the last couple of days, Apple (AAPL) has been the talk of the town as it has tanked more than 10% from its current all-time high of 134.54 printed on 28 April 2015 and broken below the “venerable” 200-day Moving Average (in common technical analysis “speak”, it implies that the long-term uptrend is over for Apple).

Given that Apple is a major component stock of all the three major U.S. stock indices (S&P 500 & DJIA = 4%, Nasdaq 100 = 13%), any further slide will have a major negative impact on the broad U.S. stock market.

Based on our last highlight dated on 20 July 2015, it has also broken below the 118.90 pivotal support.

Let us examine now its current technical elements to shed some light on Apple at this critical juncture.

Key elements

• Apple is now resting on a long-term trendline support at 112.10 joining the lows since 24 June 2013 (see weekly chart).
• Interestingly, the 112.10 support also coincides closely with the 23.6 % Fibonacci retracement of the broad up move from 15 April 2013 low to 28 April 2015 high. Based on the Elliot Wave Principle, a bullish impulsive 5 wave structure implies intact as long as the the price action holds above the 23.6% Fibonacci retracement from the start of the up move (15 April 2013) (see weekly chart).
• In the current 2 years plus of uptrend since 15 April 2013 low, Apple has recorded three occasions of negative performance of at least 5% on a weekly basis (open to close). For the week started on 12 January 2015, 27 January 2014 and 09 September 2013 respectively. The current on-going trading week has recorded a performance of -5.02% (see weekly chart)
• In these past three occasions of dismal performance (as mentioned above), Apple has manage to reverse and resumed its upside movement. In addition, the weekly decline seen on 09 Sep 2013 and 27 January 2014 were accompanied by high volume numbers of 6.7 billion and 8.2 billion respectively. Interestingly, such numbers are way higher above the current week trading volume of 2.9 billion which most media has reported negatively on Apple due to a “high volume reading” that accompanied its current decline (see weekly chart).
• Both the intermediate and long term Stochastic oscillator has reached their respective oversold region (see weekly & daily charts).
• Current price action has managed stage a rebound from the support gap of 115.30/100.72 seen on 28 January 2015 where Apple jumped up due to rosy earnings result (see daily chart).
• The intermediate resistance stands at 119.20 (see daily chart).

Key levels (1 to 3 months)

Intermediate support: 115.30/112.10

Pivot (key support): 103.74/100.72

Resistance: 119.20, 133.60 & 141.10/145.30

Next support: 81.80

Conclusion

Current technical elements are suggesting that Apple is at or coming close to a capitulation point. However, it needs to break above the 119.20 intermediate resistance is likely to neutralise the current bearish tone in order to trigger the continuation of the broad based multi-month upside movement to retest at least the current range top at 133.60.

On the contrary, a break below the 103.74/100.72 pivotal support is likely to see a further waterfall slide to target the next support at 81.80.

Source:  Charts are from eSignal

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