Apple – Ready To Bounce In Near Term

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.

http://oi48.tinypic.com/ftzj3p.jpg

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.

http://i46.tinypic.com/ipqy6q.png

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.

http://i45.tinypic.com/1z35n35.png

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.

Happy trading!

~Chris Diodato

Profile photo of MetroTraderMetrotrader (D) is one of the few practicing CMTs (Chartered Market Technicians) in the United States . The CMT certifies his knowledge of market timing and risk management approaches. He tends to look for broad market moves and take advantage of them with index funds. The strategy he principally uses is mostly quantitative, and, tested, and has avoided or capitalized on every major recession since the 1940s. He says the best way to make money is to avoid losing it in the first place.

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