After regaining its 'market darling' status again in late 2013, the world's largest company has lagged. Now, the chart of Apple is pointing to $500, or $35 lower, with yesterday's price action signaling the breakdown of a double top reversal pattern.
The Ideal Pattern
So, traders and investors: is it a signal to sell in anticipation of a 7% drop? I don't think so, as the broad market continues to show few signs of gearing up for a significant correction - which could drag AAPL down by this much. Also, if we zoom out to a one year chart Apple is still just above its uptrend support line dating to its July 2013 low. Therefore, it likely won't pay to be too negative on this stock until this support line is broken.
Now, what would make me VERY positive and actually lead me to buy some AAPL? A pipe bottom. What's a pipe bottom? Well, in short: it's a down day, with a large red candle, followed by an up day with an equally as large white candle. Statistically, these patterns are one of the most reliable, and often follow through with days to weeks of further gains. And with the NASDAQ 100 futures, as of 6:55 AM EST, up over half a percent so far, a pipe bottom occurring today certainly does not sound like a pipe dream.