Has Apple Gone As Low As It Can Go? 20 comments
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I suspect most of the readers here would rather I had titled this post, "How High Can We Go?" or "The Shackles Are Off, Apple (AAPL) Full Steam Ahead!", am I right? Or for the realist perhaps I should have used the word "should" instead of "can" because I think after last weeks events we all know that we "can" go down as low as we did, the question now is can or should we expect a retest?
Putting in a bottom is nearly always a process. Very rarely does a market simply tag the floor then rocket skywards, never looking back. But perhaps this is a special case? The government pulled out all the stops, we were heading for imminent peril, and we've put in stop gap measures like banning shorting on nearly 800 financial issues.
I'll tell you though, watching the indexes and AAPL on Friday was quite nerve racking (click on chart, below, to enlarge). Sure this was this monster gap up, but after that initial morning surge AAPL struggled and lost most of the morning gains. It kept the gap up, so that was good, but there was obviously a lot of trepidation built into Friday's session. And we plotted a black candle after yesterdays artificially induced bullish hammer.
So, getting back to 'can' or 'should' we expect a retest of the lows. It's anyone's guess, however it is a rare thing that a retest does not happen, especially after some government intervention. I only put this out there to keep you on your toes. I don't know whether to expect this or not, quite frankly at this point, nothing would surprise me. I'm battle scared and tested, but completely in uncharted territory.
What we do know is that the markets are very overbought on the 15, 30 and 60 minute charts, and what typically follows overbought conditions like this is a bit of retracement in order to unwind those oscillators. So, there will be downward pressure to start the week for sure. The big question: is there enough downward pressure to retest the lows, or are the new mechanisms and the fear of more government intervention going to prevent this?
Can you say volume? I can, and it was staggering. AAPL had double its normal volume, and the markets just went berserk! Market internals were definitely OK, but they didn't show that broad distribution you like to see across all markets.
For example the Naz and AMEX lagged slightly behind the NYSE, but with such huge confirming volume, over 3 billion shares on the Naz, I guess we can overlook slight anomalies! The good news here is that new lows dried up and many stocks showed bottoming action on their MACDs. This will provide a solid foundation for repelling any retest of the bottom.
And our favorite stock is pretty much in line with this sentiment. On top of all that, no one at Apple Stores seems to give a hoot as to what's happening in the stock market. I've been in my local store (South Shore Plaza in Braintree MA) four times this past week, and it's been jam-packed every time.
I made Genius Bar appointments from home, well in advance,and I still ended up waiting for 30 minutes when I got there. Every aisle was crammed with people, and this is a fairly large and spacious store. If there's a downturn in overall retail spending, I don't think Apple has noticed.
As Apple investors and traders, there's a lot to like about in the near to mid term with AAPL. But I'm still cautious because the overall market is completely an unknown.
But as the days wear on and we return to some form of normalcy, the technicals will start coming in line. For now the near term charts are overbought and there's plenty of resistance ahead on the Dow and the Naz, but the weekly and monthly charts are starting to shape up. If we get beyond the next week unscathed, then I would say that the near to mid term look very positive. But I say that with attenuation with respect to near term events to come from our illustrious government (he says with great sarcasm).
Disclosure: None
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This article has 20 comments:
I have already answered to that some days ago.
And we're all so glad.
I saw Bullish Hammer open for Black Candle the other night. They played their 1980's speed metal hit, "Technical Analysis is Nonsense."
Love the Bullish Hammer.
PS Isn't everything uncharted territory? If you are capable of predictive abilities so much that you can practically print money, why are you wasting time writing a blog?
And you should. See you when I'll post that back, after its materialization.
I matters little what price a stock OUGHT to be, only at what price you can find buyers. As the we sink deeper into the recession (whether this is a 1 year recession of a 10 year recession) people take money out of the market. If Mutual Fund XXF has 1 M shares of Apple, and their subscribers pull 40% of their money out of the fund, and/or XXF decides to decrease its exposure to stocks by 50%, then they will be sellers, not buyers.
A retreating tide lowers all ships. Apple will (we all hope) float a little higher than the rest, but it will not be immune to the overall effect.
(disclosure: still long - but not as much)
True, but tides are affected by the depth of the water, the shallower the beach, the higher the tidal change. Apple is in a the deep waters floating on over 20 billion in cash, out there where the tide can't sway it as much..... or so I hope haha... well I tried....obviously one look at the chart shows I am wrong
However, bring on new lows! I made a little money off the last drop and pop, but I'm more ready for it too happen again! Bring it on suckas!
Not necessarily. If you're holding a good company with a long-term view. Do you think Warren Buffett's been concerned about low stock prices of any company BRK's invested in? If I have a stock that's generating a lot of cash, and continues to do so, and I can afford to keep my money there, why would I care if the stock price falls? Doesn't that just give me an opportunity to buy more at a discount?