Apple Inc. (AAPL) - Get Report was last seen at $177.86 Tuesday a couple of hours before the close, down 3.77%. That's better than the dip we saw to $170.26 last week. After Thanksgiving, the stock was in bear market territory, 27.1% below its all-time intraday high of $233.47 set on Oct. 3. This was a quick and volatile fall from grace.
Apple's downside risk accelerated following its latest earnings report released on Nov. 1. There seems to be a concern about iPhone demand for the holidays. Also the fact that the company will no longer offer a bean count on model sales is causing investor concerns.
Apple began the fourth quarter setting its all-time intraday high of $233.47 on Oct. 3. Before setting this high, the 12x3x3 weekly slow stochastic reading provided a warning. Remember that stochastic readings scale between 00.00 and 100.00 and a reading above 80.00 means the stock is overbought. Apple's reading was above 90.00 between the weeks of Aug. 24 and Sept. 14, which I describe as an "inflating parabolic bubble." This has been an accurate warning to reduce holdings for any stock all year long.
The daily chart for Apple
Courtesy of MetaStock Xenith
The daily chart for Apple shows four horizontal lines. At the top are my monthly and quarterly risky levels at $222.65 and $227.22, respectively, which are below the all-time high. The bottom two lines are my semiannual and annual pivots at $181.73 and $176.57, respectively, which have been magnets since Nov. 20.
The rebound since the Nov. 26 low of $170.26 stalled at $184.94 on Dec. 3, which "filled the gap" to the Nov. 19 low of $194.99. This makes it tough for the stock to rebound to $187.00, which would take shares out of bear market territory.
The weekly chart for Apple
Courtesy of MetaStock Xenith
The weekly chart for Apple is negative but oversold with the stock below its five-week modified moving average of $193.59. The stock is well above its 200-week simple moving average, which is the "reversion to the mean" at $141.36. Note how the "reversion to the mean" was a buying opportunity between the weeks of May 6, 2016 and July 1, 2016 when the average was around $93.30. Between May 2015 and June 2016, Apple declined by 33%, which is possible going into 2019. The 12x3x3 weekly slow stochastic reading is projected to end this week declining to 17.67 down from 22.30 on Nov. 30 falling below the oversold threshold of 20.00.
Investors who wish to add to long positions should buy on weakness to my annual pivot at $176.57. Beware, however, that the stock could decline to its 200-week simple moving average in 2019, which is now $141.35. If momentum returns, the upside above $187.00 should be limited to the 200-day simple moving average of $194.55.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.