By Chris Diodato
Every market technician saw it, and every technician raved about it, as Apple, the darling stock of the world, formed a bearish head and shoulders top. The breakdown began last Friday, as the market leader pierced through the bottom of the major support level at $655.
Yes, the target is down at $600, but very often, this pattern will pull back, shaking out weak sellers. With bullish divergences in the RSI right now, and a very bullish candlestick pattern, it looks like it is ready to do just this.
And in the daily chart, you can see the candlestick pattern, known as a hammer. This is a signal that demand has once again stepped in and has taken control in the market. It's a short term pattern with short term implications.
I have the target in this chart at around $655.37. The time target would be around October 12, which conflicts with my October 23rd top prediction. Therefore, I suggest to use $655.37 as a "minimum target" for trading purposes. The second target would be at $674.62
Now remember, these are just my thoughts for the short term. With the breakage of the head and shoulders pattern last week, the active target is $600. That's the longer term target. Here, I am just trying to forecast the fluctuations until that point.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.