Stock of the day: Apple

It’s time to update you on Apple, one of the most popular companies in any investor’s portfolio. The last time we talked about Apple it was in the middle of November and back then, the price was around 154 USD per share. We were bullish, seeing a very handsome breakout from the symmetric triangle pattern:

“The reason we said buyers struck back again is that yesterday the price broke the upper line of the triangle and closed the bullish day above it. In theory, that’s the very beginning of another, major mid-term buy signal. With all that said, sentiment is back on the green side of the market.”

I have to admit that it worked out pretty well. The price was climbing higher after that and managed to set new all-time highs at the beginning of the year. And so, we’re gathering here today because there is a chance that Apple has matured into a correction.

The reason we think that this may happen soon, is the Head and Shoulders pattern on the chart (yellow). We’re currently in the process of creating a right shoulder, so just before the potential sell signal. This one will come once the price manages to close a day below the upper green line which, in our case, is the neckline.

A breakout of the neckline will bring us a mid-term sell signal but it will not be a catastrophe. As you can see on the chart, we still have a lot of supports underneath it, and they’re both dynamic and horizontal.

To sum up, sentiment on Apple is still good but the breakout of the neckline can initiate the bearish correction in the mid-term.