It’s not often I get the chance to plug a future competitor. As some of you know, my son Kyle is helping me out this summer. He will graduate in December with an Economics major and Personal Financial Planning minor from Texas Tech University in lovely Lubbock, TX.
In addition to performing many rather thankless duties for me, he has spent a fair amount of time learning the ropes of charting and technical analysis. I asked him his opinion on AAPL the other day, and am pleased to present his analysis. FWIW, I think he did a very nice job.
It wasn’t the easiest of assignments. Since our bottom call on April 19 [see: Is it Safe?], the stock quickly rallied to our upside target (a nice 20% gain), then promptly gave back almost all of those gains. After all is said and done, he feels bullish about the rally continuing – a forecast with which I agree.
I hope to lure Kyle back after he graduates for more of the same. Though, he seems pretty excited about the financial planning field. Those of you in the biz who would like to chat with this bright young lad about his career plans, feel free to drop me a line.
* * * * *
AAPL rose sharply following its earnings release last Tuesday. EPS was $7.47 on revenue of $35.3 billion. Both numbers beat Wall Street estimates. Analysts had been expecting EPS of $7.34 on revenue of $35.18 billion.
It shot up 25 points, breaking through the midline of both the rising purple channel and a large falling channel (in white below) from the 705 high. It backtested the white channel midline, then shot up yesterday to complete a Bat Pattern (yellow) at the .886 of the drop from 465 on May 7.
The completed Bat Pattern could pay off with a drop to backtest the white channel midline around 430-433 (the last Bat Pattern – from 469.95 on March 25 – fell much more sharply, retracing .886 of its rise.)
Such a pullback could ultimately be bullish, as it could form the right shoulder of another IH&S (red) that targets 525 – only a few points away from the 1.618 extension (522.39) of the 469-385 drop beginning March 25. This target intersects with the top of the white channel around August 5-12.
But, given that the recent low was slightly higher than the April lows, a large IH&S Pattern has already completed. It could go ahead and play out now.
The current rising purple channel doesn’t intersect with the top of the white channel until lat August/early September, about the time it passes through the latest Bat Pattern’s extension to the 1.618 at 513.26.
Both of these bullish scenarios assume that AAPL is able to beat its former highs of 465 and 469.95. Many potential harmonic patterns on the way down from 705 have been unable to. In fact, each successive high has been lower than the last.