Let Apple Fall Before You Pick It Up
Shares of Apple (AAPL) - Get Report have been trading very heavy of late, and shares have closed in the red during seven of the last eight sessions. This rather weak trend began as the stock began to bump up against heavy resistance near the stock's 200-day moving average. Apple gave back little ground after failing to move past this key long-term indicator at first but this changed in a big way on Tuesday. The breakdown on Nov. 10 was damaging -- and for patient bulls, it will lead to lower entry levels in the near term.
Apple fell over 3% on accelerating downside pressure on Tuesday, leaving behind an ominous short-term top in the process. The stock stabilized near its September high by the close that day but has been unable to gain traction at this key support level since then. Overhead pressure is building now and will likely force shares lower before a solid bottom is reached. For patient investors, this will provide a low-risk entry opportunity.
Apple bulls should focus on the $113 area over the next few weeks. This key support area marked the top of the three week consolidation that preceded the Oct. 20 breakout. This zone also represents a one-third retracement of the powerful bull run off the August lows. Investors may benefit from a stand-aside posture until this low-risk entry zone is tested.
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Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.