Apple Stock: Support Is Found HERE
The markets have been under pressure, and the volatility stemming from the election is enough to make anyone sick. In times of uncertainty such as this, I take a step back to reduce exposure and get a larger view of my investments. This works wonders, as the smaller market gyrations take a back seat to the bigger picture and help alleviate many of my concerns.
When it comes to Apple Inc. (NASDAQ:AAPL) stock, there are two key price points that I am currently watching.
I have been using technical analysis as a tool to strategically and systematically setup trading objectives. I do not dismiss fundamental data, as this information is quite useful in defining the backdrop, but I rely on technical indicators as my triggers because monitoring prices removes my emotions from a trade. Removing biases is the key to defining my risk.
The price points I am going to outline define the risk in AAPL stock. The first price point is reason to raise concern, and the second would be reason to change my trading view on Apple stock.
The following Apple stock price chart illustrates the big-picture trend and the first price point.
Chart courtesy of StockCharts.com
AAPL stock has effectively created two parallel lines that define a trading range. The pattern is known as an ascending channel. An ascending channel has two trend lines that define the upper resistance and lower support. AAPL stock will oscillate between these two trend lines for as long as the trend permits.
The first key price point is defined by the support trend line of this ascending channel. Apple stock has recently bounced off the lower support, so I can only assume that the resistance defined by the upper trend is the next price objective. As long as AAPL stock is trading above the lower support line, I can only assume that the bull market in Apple stock remains intact. This level currently sits at around $100.00.
The following Apple stock chart illustrates the second price point that is found on the shorter-duration chart.
Chart courtesy of StockCharts.com
The 200-day moving average is the dividing line between stocks trading in a bull market versus stocks trading in a bear market. When the share price is above the moving average, it is bullish. When the share price is below the moving average, it is bearish. It is not uncommon for traders to eye this moving average as a level of support when the price approaches it.
If markets behave poorly after the presidential election, this level may come into play as the price it sits on coincides with the trend line support from the ascending channel that was illustrated on the first AAPL stock chart above.
If market conditions deteriorate further, there is one last level of support. It is the second and most important level of support that remains. It is the horizontal level of resistance that is highlighted on the chart above. This price level represents the price lows in 2015 and 2016, as well as the previous high that was generated in 2012.
The price action has served to reaffirm that $90.00 is indeed a very important level. The price action in 2015 and 2016 could be interpreted as a backtest because the price returned to a previous level of resistance to conclude that this level is now a very important level of support.
If this level is ever breached on a sustained basis, I can only assume the worst. The worst would be that a bear market in Apple stock—and possibly the entire equity market—has begun.
Bottom Line on Apple Inc. Stock
I am bullish on Apple stock and I believe that any weakness to test support will be an opportunity to acquire shares within a much larger bull market. If the price does fall below the key supports, I would have reason to believe that something has fundamentally changed, and I would act to reassess my trading bias in AAPL stock immediately.