Apple Inc. (AAPL) - Get Report shares were down nearly 2% in Thursday's broad-based market pullback, closing near the low of the session and on the support line of a rising triangle pattern on the daily chart. On Friday, AAPL stock is roughly flat in morning trade.
The triangle pattern has been forming for the last month as AAPL stock moved up through its May highs, to make a series of new all-time highs. But under the surface there have been technical issues that have cast doubt on the sustainability of the recent trend, giving the prospect of a breakdown from the short-term technical pattern more gravity. Will this jeopardize Apple's run at a $1 trillion market cap?
AAPL stock has rallied over 80% since its May 2016 low, but overall volume is down 20% in that time. The surge in price this month, which formed the rising triangle and eclipsed the May highs has not been supported by positive money flow. Price momentum is a powerful force in and of itself, as the 15-month rally shows, but Apple "buyers fatigue" may be setting in.
The accumulation/distribution line has crossed below its 21-period signal average. Additionally, the Chaikin oscillator, an average of the 3-day and 10-day A/D line is below its centerline. Chaikin money flow is crossing into negative territory, and the percentage volume oscillator, which uses the moving average convergence/divergence formula to plot the 12-day and 26-day averages of volume, has made a bearish crossover.
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The question of whether a triangle pattern breakdown is a minor short-term event or a more substantial and longer term issue for Apple shares could be determined by the integrity of the next level of support on the chart. It is situated in the $153.50 area, and is the former gap support area and the location of the previous May highs. If it is tested and holds, a bounce could see another new high, if it fails the next downside target is the $142 June low.
Apple shares closed trading down 0.23% to $157.50 Friday.
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The author is an independent contributor and at the time of publication had no position in the stock.