On Nov 1 [see: All Eyes on AAPL] I noted that AAPL, then at 219.55, was likely headed for its 200 DMA down around 192.17. 

I argued that if the 200 DMA didn’t hold, the stock’s nearest significant support was at 144.48. I felt a little silly suggesting such a thing.

After all, the company has announced massive expansions of its buyback plan every time the stock gets the sniffles [see: Engineering AAPL’s Breakout.]

The laughter died down when the stock closed below the SMA200 on Nov 13 [see: AAPL Discovers Gravity.]It came within 2.11 on Dec 24, which was close enough to touch off a 9% bounce.  Tonight, however, it got that much closer: 144.51.  We’ll call this a tag.What happens if the stock bounces here?  And, more importantly, what happens if it doesn’t?

continued for members…

If AAPL bounces here, the most urgent upside targets are to regain the SMA10 (156.66 at today’s close but dropping fast), the SMA20 at 163.95 (which would allow it to break out of the falling red channel) and the purple channel .786 line at 176ish.The downside case is pretty straightforward.  The .786 at 120.29 aligns with the purple channel .236 line towards the end of January and the .886 at 105.89 intersects with the purple channel bottom in mid-March.

Though, the existing falling red channel puts the idealized timing at Jan 28 and Feb 20.

This lower target would likely align with the SPX 2138 scenario.  It’s about a 27% drop from here, whereas the .786 is only about 17% lower.

Is management likely to sit back and watch the stock drop another 17 or 27%?  I can’t imagine they would.  On the other hand, I wouldn’t have bet they’d let it drop this far.

So, same advice as before: it should get a bounce at this key support.  But, if it doesn’t, be very careful in shorting.  Trailing stops are always a very good idea.

GLTA.