Wednesday, December 2, 2009

What does AAPL tell us about the market?

AAPL monthly chart shows that new highs have recently been made and November was an "inside" month. This could be the beginning of a consolidation phase that lasts for a bit before a breakout to the upside. Or it could rollover. MACD is still bullish although slightly overextended.

Weekly chart shows AAPL having just completed a 3-push upmove, although not classically an Elliot Wave pattern (Wave 3 is too short), followed by a recent swing down which could be a consolidation pattern. Bears would need to be careful here.

Finally, the daily pattern shows the consolidation which could be the long bull flag formation. BUT, the MACD is clearly negative. Brian Shannon says repeatedly that MACD divergences are more useful at predicting a bottom than a top, so the significance of this may be limited. Conclusions below.

Conclusion: The 208 and 185 levels seem important. Any breakout above 208 would be significant and could tell us the entire market is healthy. A break down below 185 would tell us that even the market leaders, the big boys who are the last generals to be killed, have been shot.

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