In early January, I published an article detailing the chart's journey from the 9/21/2012 high of 705.07 to the 4/19/2013 low of 385.10. The article is available online by accessing the following link: Forecasting Apple Using Evidence-Driven Technical Analysis. In the midst of all the heightened media attention and the exorbitant predictions of the stock's eventual demise, I remained adamant the stock was tracing out a deep fourth wave that's likely to terminate in the 426-355 range, citing a preferred target of 372. As it turned out, the final low was established at 385.10 on 4/19/2013.
In the same article, I also deciphered the structure underlying the stock's rise from the 385.10 low on 4/19/2013 to the 575.14 high on 12/5/2013. As a result, I cautioned against an imminent decline aiming to reclaim as much as 78.6% (target of 425.77, or roughly 150 points from the 575.14 high) of the multi-month rally. In retrospect, my concerns were well-founded, even though the decline of 82 points (or 43% retracement) fell well short of expectations. To my credit, however, I did publish the chart below prior to the release of the most recent earnings report, casting doubt on the 'feasibility' of 425.77 in light of the pre-earnings price action. (Read chart annotations).
Chart 1. A leading diagonal in the first wave position. This automatically implies the current rally is a third wave, which is usually the most potent,
especially on the heels of a first-wave leading diagonal. Contrary to what Jim Cramer and the Fibonacci Queen suggested a couple of weeks ago, the
stock is far from being vulnerable to any technical shocks.
Where to from Here?
Last Tuesday, I published chart 2 in which I cited a short-term target of 637.85 (hourly time frame). As it turned out, Friday's session printed a high of 644.17 before reversing course in profit-taking fashion and closing on the low side of the day's range. Charts 3 through 5 attempt to make technical sense of what happened and what to expect next.
Chart 2. (Hourly time frame). Wave 5's ideal size is usually 0.618 x net distance measured from bottom of wave 1 to top of wave 3. Interestingly, this
target is in line with the 78.6% retracement of the 2012-2013 bear market. Friday's session exceeded this target by just over 6 points before succumbing
to profit taking.
Chart 4. Notice the proximity of the old blue neckline to the 78.6% retracement level of the XA leg (i.e., the 2012-2013 decline) and the upper trend line
Chart 3. Price reached the upper trend line of the leading diagonal and almost filled the open gap at 644.61.
of the red wedge. Also notice the similarities of the blue and green pattern. The inverse HS at the base of what could very well turn out to be a cup
has a measured upside of roughly 770.
Chart 5. (Monthly time frame). Wave 4 ended just above monthly TDST Support. Two upside target clusters for wave 5 are calculated based on
Fibonacci projections and extensions.
Chart 6. Friday's session counted as TD Sequential Sell Countdown bar #13.
Chart 7. Friday's close was roughly 4 points below the established HVA / vPOC (~ 637 to 637.50). A test of this resistance area on Monday could usher
in another down leg targeting the low 620's. (No downside risk above 637.50).
Chart 8. If more downside is in store, expect a move higher towards ~637 early on Monday, followed by another down leg towards the low 620's.
Chart 9. The Nasdaq 100 ($NDX) recouped all of the March-April losses. From a chart pattern standpoint, the Crab is now the only scenario left. In the
meantime, a consolidation phase is likely to play out.
Trade well and good luck,
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