NEW YORK (TheStreet) -- Today's the day Apple (AAPL) - Get Apple Inc. Report will officially become the most important company in the investment universe -- if it wasn't already -- but will it be able to weather a curse that has plagued other companies that have come before it? The answer may be in the charts.
Apple is kicking out AT&T (T) - Get AT&T Inc. Report to join the Dow Jones Industrial Average. Dow Jones is expected to make the change after today's close. It's a testament to the relevance of the DJIA that Apple, the world's largest company, wasn't already in the index. But for Apple, it was perhaps good news, because joining the Dow has historically come at a cost.
The Dow Curse
Historical data shows that inclusion into the prestigious Dow 30 club is actually more of a curse than blessing.
Since 1999, the Dow Jones Averages Committee approved 15 additions to the index. One month later, nine of the 15 new components lost on average 6.3%. The remaining six components gained 3.3% on average. The average loss of all new Dow Jones components one month later was 2.5%
One year later, seven of the 15 new components lost on average 29%. The remaining eight components gained 16% on average. The average loss of all new Dow Jones components one year later was 5.1%.
Can Apple fight off the Dow Curse?
There's no crystal ball, but there's a simple and effective way to identify inflection points likely to cause selloffs.
The weekly Apple chart below highlights two inflection points (red and green dots) worth watching.
The red dot marks a natural resistance level created by two long-term trend lines. Just because resistance levels exist doesn't mean they are reached, but if Apple can get there (around $140 depending on when), it will probably react.
The green dot represents a cluster of support at $120-to-$123. As long as trade remains above support, the trend is up.
The Apple seasonality chart (based on AAPL's historical price pattern) shows a few weak spots in the first half of 2015, with the biggest weak spot in mid-September.
In fact, Apple's massive 45% correction in 2012 started exactly when seasonality projected a price peak. A detailed Apple seasonality chart is available here: AAPL Seasonality chart
As long as Apple stays above that $120-to-$123 resistance level, it has a good chance of fending off the Dow curse and even rally to test resistance around $140. Sustained trade below $120 would be a warning signal. The risk of a selloff will increase if Apple gets closer to 140.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.