Fortunately I didn’t buy Apple stock for $700! AAPL share price has dropped 21.5% since the all-time high and you can invest in an Apple share for “just” $547 at the start of this week. Several technical indicators show negative signs regarding the strong uptrend of Apple shares, such as MACD divergence and a “morning star” candlestick pattern at the weekly graph, in addition to the bearish formation printed in the monthly graph. AAPL share price has pulled back to a key support level that will probably be used as an entry level for some stock traders. The question is whether Apple stock will breach the resistance level at $610 or $650 once again. If not, $700 would be nothing more than a sweet memory for Apple.
I would be very surprised if Apple share price breaches the support level at around $530 in the following weeks. A bounce is much more likely I guess. Due to the MACD divergence I am predicting that Apple’s uptrend is coming to a halt though. $700 will be key resistance from now on for any upward movement for Apple stock, which is expected to enter a consolidation phase in the next months. Consolidating between $530 and $700 or $650 doesn’t mean avoiding buying Apple stock, but rather being more cautious and less optimistic for new highs.
Perhaps by consolidating, AAPL share price will build up enough strength to shoot over the resistance level of $700. If that happens, momentum and over-reaction by investors will guarantee much higher prices for Apple stock. On the other hand, should the support level at $530 fail, I won’t be buying Apple stock until it finds support somewhere between $350 and $400. And even then I won’t be that excited with my investment, given I don’t own any Apple product, like an iPad or an iPhone! Perhaps Apple fanboys have a different view of the Apple stock!
Disclaimer: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.