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Apple (AAPL) stock has fallen roughly 25% from its peaks of 2015, but its selloff is far from over, comprehensive technical analysis reveals. 

We began writing that Apple was headed for a large selloff back on July 22, just a couple of days after the stock had hit one of its peaks near $132. We warned that the historical patterns that the decision support engine was identifying could pull Apple shares down into the $65 +/-$10 zone. Of course, many investors, analysts and reporters appeared to be in denial that this favored stock could sell off significantly. After all, the company had $200 billion in cash, had the coolest products on the market and had become the largest music library in the world.

It wasn't that the company was doing anything wrong, however. It was that the crowd had bought the story that Apple was untouchable. There was certainty that the company -- and the stock -- could do no wrong, but "certainty" is one of the most dangerous single words in in finance. The stock's declines since last summer simply mean the market is working off that certainty. 

The good news is that once all the certainty is worked off, and the "obvious" is doubted and the crowd stops asking whether the decline is over, the decline will end, new apple buds will sprout and a new rally will take place. Unfortunately, that is likely 12-24 months from now, and very possibly 30 to 50 points below current price levels.

Click here to see the following chart in a new window

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The chart above is an updated version of the same chart that appeared in our July article and was later updated in articles published on Sept. 9, Oct. 2, and Jan. 13. Be sure to click on the link above the chart for a detailed view. What is clear, regardless of how the crowd interprets the earnings news that the company announced after Tuesday's close, is that the decline from $132 doesn't look complete. As you can see in the lower pane of the graph, the stochastics are now in free fall, with the red line accelerating its decline and moving away from the green line. The last time these long-term stochastics were in a similar condition was during the 2012 to 2013 slide, when the stock's price fell from around $95 to around $55 in seven months. If you are trying to convince yourself that "It's different this time," look again. Notice the lower highs in the stochastics vs. the higher highs in prices. This is what we call a bearish divergence sell signal, and it indicates dramatic instability in the underpinnings of a market, sector or stock. Well, it happened again at the late-2014 and mid-2015 highs (see the bold blue lines pointing in opposite directions in price and stochastics). Combined, these two conditions provide the "uh-oh" moment that the decision support engine highlighted in our earlier analyses. They also provided the right-hand pink box (a bounce target) as the ideal place for investors to sell their Apple stock.   

From the August low, near $92, prices rose into the pink box, and the decision support engine issued a warning to use $120 as a sell stop. Now the odds strongly favor sub-$90 prices in the coming weeks to months, with both of the lower price zones still highly relevant. Again, nothing about the company went from terrific to terrible after the stock hit its last peak last year. What had changed was the crowd's certainty, which began to wane. And that change is taking prices on a wealth-destroying ride. Just check your Apple wealth to see whether it has declined 25% from last April's highs. 

Now what? Right now, we can't rule out a bounce toward $105 +/-$3. Nevertheless, the pattern of correction is unresolved, and the stock's price needs to test at least the low $80s before that pattern will be resolved. Also, the monthly stochastics aren't oversold, as they were at the 2008 and 2012 lows. Once they do become oversold, there will be objective evidence that a rare buying opportunity has arrived.

Therefore, if you own shares of Apple, use $95 as your sell stop to protect your holdings from the next wave down toward $83 +/-$3. If given the chance, sell into the $108 +/-$3 zone, before any near-term bounce runs out of steam and the stock tests that next support zone. If you're flat, you can use these parameters to sell short the stock. If you're already short, you can use them to maintain and/or add to your position.

In times like these, surprises tend to occur to the downside more than to the upside. So, keep your eyes on the Apple, but don't take your bite until a few more months go by and the stock tests the higher green buy circle on the chart. 

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You see Jim Cramer on TV. Now, see where he invests his money and why Apple stock is a core holding of his multimillion-dollar portfolio. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.