With today’s launch of Apple's
(NASDAQ:AAPL) new iPhone 5, I thought it fitting to take a hard look at the charts with the idea of understanding short and long term projections, and within that context, potential entry or add price points. Remember, qualified trend provides trend direction and the probability of trend continuance whereas anchor bars and the resultant zones provide timing.
With that in mind, the current state of Apple’s trend is confirmed bullish on the short term, and suspect bullish on the intermediate and long term time frames. The long term “suspect” qualifier isn’t a concern because Apple retested that area already and regenerated higher. The intermediate term suspect breakout never was tested though and that price point is $641.25. There’s an outside risk Apple could trade back that far.
So what about projections? I typically use ABCD projections which you are probably familiar with except that I qualify them and base them on percentage moves, not price.
The takeaway is that short-term, Apple has just about finished this latest leg up. That comes at the time of a product launch, and the first thing one has to wonder is, “Will this be a sell the news event?”
The second point is that the longer term projections both point to the mid $900s as the eventual price target. Given that the weekly and monthly targets are almost identical, if and when Apple gets to that price area I would become much more concerned about trend continuance.
As for timing an entry, on the daily chart, there are three anchored price zones with the highest zone in the mid $680s , then the low $670s and finally down between $651-$656. Of these, the sweet spot looks to be the middle price zone.
If you are a trader, then you can take these same principals and drill down to shorter term time frames since they are applicable to any time frame. The only issue with the shorter and shorter time frames is that the noise level increases and under- and overshoots of price are more common.
Having said that, here are two charts and time frames that I use when making very short term trades -- a 20-day chart using 2-hour bars and a 5-day, 10-minute bar chart. What I like to find is overlapping anchored support zones on these two time frames. In the case of Apple there are none on these time frames.
There is, however, overlap between the 20-day and 3-month chart in the $675 price area. If you are looking add Apple to your portfolio or make additions to a core position, I would be patient and wait for a retrace to that price zone to do so.
No positions in stocks mentioned.