Stock Chart AAPL

Posted by downtowntrader | 7/16/2008 08:50:00 PM | 0 comments »

Stock Chart Analysis AAPL

Apple Inc. (Public, NASDAQ:AAPL)

Often, after a market enters a trending state, you will start seeing similar patterns appearing in multiple stocks. You can see this to a greater degree during specific sector rotations. Lately, I've been seeing a lot of cup and handle type bases, which would make sense if you analyze what the markets have done over the past several months.

First there was the steep drop from October to March, where the left side of many of these bases was formed. Then as the markets bottomed and attempted a rally, the ride side was formed. Now as the markets correct once again, the stronger stocks are consolidating by retracing a portion of the right side of the base, therefore forming the handle. There are no guarantees that a stock will ever clear the handle and break to new highs, but the fact that they are well above the lows, while the markets test the lows, shows relative strength.

AAPL is a pretty good example of the type of base I'm seeing recently. It is pulling back in a flag like base, which also could be the handle in the base. I like how the 200 day sma is also providing support as AAPL attempts to find a low here. The one thing I don't like here is the relatively light volume as AAPL built the right side of the cup, but the decrease in volume in the handle is desirable. AAPL is not out of the woods yet though. It is still under a downward sloping 50 day sma and technically, it could lose the 200 fairly easily. However, trading is all about taking calculated risks, and if the markets are indeed getting ready to stage a rally, then AAPL should get the support it needs to attempt a breakout.

Good Trading,


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