December 24, 2009
Shares of Apple Inc (NASDAQ: AAPL) are again headed towards their 2009 highs (closing high was on November 16 at $206.63). Is a breakout in the cards?
Apple Computer has a huge following, not only among computer users, but investors too. Rallies are typically strong as traders pile into this stock when they feel new highs are imminent.
Apple has had two rallies with lower intra-day highs. The first reached $208.71 on Oct 21 and the second reached $208 on November 16. Draw a line through these highs and you have a declining trend resistance line.
The same can be applied to Apple’s lows with an intra-day low of $185.92 on November 3 followed by a higher intra-day low of $188.70 on December 8. Draw a line through these lows and you have a rising trend support line.
Typically when either of these lines is broken, the stock will tend to continue in the direction of the break.
Apple is headed for the declining trend resistance line which is at about $206 as of Wednesday’s December 23 close.
We are not the only folks who see this pattern. As we near the declining resistance line expect traders to start adding to positions in expectation of a year end rally to new highs.
Disclosure: The www.fibtimer.com Stock Strategy has a position in Apple Inc.