AAPL Discovers Gravity

A quick update on AAPL, which has reached two of our downside targets today…

As we discussed prior to AAPL’s earnings report [see: All Eyes on AAPL] the stock had a gap to close and 200 DMA to backtest.  The danger in reaching both targets was that AAPL would have to descend below the triangle top above which it broke out in August [see: Focus on the FAANGs.]  But, as we discussed, this wouldn’t necessarily be all that alarming.

A drop to 200 or so wouldn’t do much to dent bulls’ enthusiasm. Even a drop to the SMA200, currently at 192.17, could be passed off as a base-building exercise.

It’s been almost two weeks since AAPL posted earnings, and it just reached its SMA200, (one day after closing the gap) posting a low today of 191.45 — an 18% drop from its Oct 3 highs.  Needless to say, some bulls are getting nervous.

A quick glance at the weekly chart shows why.  If the rising red channel from 2016 doesn’t hold, it’s quite a ways to the first serious support.  Maybe it’s time to expand the company’s stock repurchase plan.Don’t own any AAPL? Wondering why you should care?  Drops through AAPL’s 200-DMA have been a trap door to some big swoons for the overall market.Stay tuned.

 

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