Posted in
Technical Analysis
By: Tom Gentile
on September 8th, 2023
One of the darlings of Wall Street has been for a while and, looking at the chart for this year, still is Apple, Inc. (NASDAQ: AAPL).
Even after it has topped and rolled over in late July, early August and is showing more sideways chop and wider swinging price volatility it is still up 38% Year-to-Date (YTD). Figure 1.
Recent Technical Concerns on AAPL
AAPL broke the year long uptrend late July/early August with a downside gap on the price chart shown in Figure 1.
It slid a bit further before forming a pivot low which it bounced from at 172-173. It proceeded to trade higher until it filled the gap back up near 190.
That became a price resistance as the stock then took a turn back to the downside.
This move down starting last Thursday (Figure 2), was attributed to the news out of China they were cracking down on iPhone use among government workers.
According to James Cramer on CNBC.com he reports both JP Morgan and Citi have concerns about the stock and items they are saying be aware of.
AAPL traded up off 175 yesterday and is following through a bit to the upside today, but one has to be aware of the recent downside gap from Wednesday to Thursday.
Will APPL fill the gap and that becomes a new resistance price it trades lower from? Time will tell.
If this move holds and AAPL moves higher then we have a slightly higher pivot low. This may add to buyers conviction for it higher and we will see if the bulls can take it higher.
Should that fail and the prior pivot low in the 172-173 price gets taken out AAPL is at risk of trading lower.
Options Traders Know
My team and I are primarily options traders. We anticipate what the security may do and the direction (up, down, or sideways). We have a number of options strategies at our disposal to use in trading with the goal of being profitable on those trade for whichever direction the security moves.
Figure 2 above shows a few horizontal, green lines indicating prior pivot points that may become a support for AAPL.
When trying to ascertain which of the pivot lows will become support, no one knows, but one technical means to anticipate which one or where a potential support may reside is using Fibonacci Retracement analysis.
My options analysis software, www.tomsoptiontools.com has a Fibonacci Retracement tool.
I used it on a YTD chart for AAPL (Figure 3), to see where a few retracement levels lie as a means to anticipate possible future support.
For assessing Fibonacci retracement levels (of an uptrend), one takes a closing low to the closing high of that trend time period and then the tool calculates the Fibonacci number/percentages and places them on the chart. Now 50% or 50 is not part of the Fibonacci sequence, but it is so often used many Fib tools will include it.
I am not saying AAPL will trade down to these levels as there may be much more buying interest out there than I know of, but should it break lower these are the levels that I would be aware of for spots to consider opening up bullish option trades.
Tom Gentile
America’s Pattern Trader
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
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