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Apple Hits New Highs - Now What?

Apple stock briefly hit new all-time highs on Tuesday, as investors continue to bid up the iPhone maker. How much further can the stock go?

With Tuesday morning’s push, Apple  (AAPL) - Get Apple Inc. Report finally hit a new all-time high, although the rally was brief. Shares are currently down about 0.3% in afternoon trading, as the stock has retreated from its new milestone.

It hasn't been all that long since its last high, with Apple previously hitting an all-time high on Sept. 2 at $137.98 shortly after its stock split. 

Since then, investors have been waiting for months for Apple to join the party that many other tech stocks have been experiencing.

Apple and Tesla  (TSLA) - Get Tesla Inc Report both announced a stock split for the end of August. Both stocks scorched higher into the event -- dragging the Nasdaq and others with it -- before topping out a few days later.

While the Nasdaq has been fueled back to new highs, Apple and its mega-cap tech peers have been taking their time trading in a sideways manner.

Apple has now found a new stride of momentum, though. The question is, how far will it carry it?

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Daily chart of Apple stock.

Daily chart of Apple stock.

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I started to get bullish on Apple in mid-November, although that proved to be a bit early. There was still some sideways action left to chew through before the stock’s larger and more notable breakout in December.

Most recently, bulls were looking for a run from the low $130s to the prior all-time high near $138. Now that it's right around there, what can investors expect?

The $138 to $140 area would be a natural area for short-term investors to book some profit, particularly if they were involved in Apple from the $120 to $125 area. Further, the RSI measure at the bottom of the chart shows that Apple is becoming a bit overbought.

On its own, the RSI is not the end-all, be-all measure. For instance, look at how much more elevated the reading was at various points since May. This reading could certainly go higher, but it does warrant mentioning its current state.

The healthiest thing Apple could at this point is creep up into the $138 to $140 area and consolidate a bit, before pushing higher.

If Apple can continue higher, the 123.6% and 138.2% extensions become our focus, near $146 and $151, respectively.

On the downside, it’s hard to get too bearish if Apple remains above $130 and the 10-day moving average. Below that could put the 21-day moving average and the October high in play near $125.39.

A larger breakdown -- particularly if the overall market moves lower -- could put the $118 to $120 area in play, where Apple has several key moving averages and support levels.