Stock of the day: Apple

It’s been long time, no see with our old friend Apple. The last time we analysed this company it was in mid-January. Back then, we spotted a very promising bearish pattern – Head and Shoulders. There was no proper sell signal but we were very close to one. We wrote:

“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.”

The price fell almost immediately, and on January 24^th AAPL reached a crucial horizontal support on the 155 USD (blue). That drop was part of a bigger bearish correction, which had been dominating the past few months (red and blue lines).

We wouldn’t be wrong to think this correction ended yesterday. Why? Because the price broke crucial dynamic resistances and escaped from the correction pattern (flag/wedge) to the upside.

Currently, the closest aim in the mid-term is the yellow resistance around 177 USD. That’s in the mid-term though, as in the short-term we may experience a small bearish correction. Why? Because since March 15^th , we’ve had almost only bullish days. The price has climbed significantly and some kind of take profit action would simply be healthy for the overall up trend.

To sum up, the general sentiment is positive and in the mid and long-term, we should see Apple trading higher.