Apple, Inc. opened the trading session on Thursday mostly flat after consolidating on Wednesday and then fell about 1 percent lower within the first half-hour of trading.
On Wednesday, Market Rebellion co-founder Jon Najarian said on CNBC he added to his position in Apple, despite the tech giant nearing a $3 trillion market cap. Najarian believes the stock is headed to $200.
Bank of America is also bullish on Apple due to strong demand for iPhones and lower trade-in prices for older models. BofA Analyst Wamsi Mohan has a Buy rating on Apple and a price target of $215.
The Apple Chart
Apple reversed to the upside on March 15 but didn’t confirm a daily uptrend until Monday, when the stock printed its first higher low after soaring up 16 percent. Apple then pulled back about 1.5 percent lower to print the higher low before rising up another 4.3 percent between March 28 and Wednesday.On Wednesday, Apple almost printed an inside bar pattern on the daily chart, although the stock briefly rose above Tuesday’s high-of-day. On Thursday, Apple broke down bearishly from the pattern.
If Apple continues to consolidate lower but holds above the eight-day exponential moving average, it may settle into a bull flag pattern on the daily chart. If this happens and the pattern is recognized, the measured move is about 19 percent, which indicates Apple could trade up toward the $211 mark.
Continued consolidation is likely to come because Apple’s relative strength index (RSI) is measuring in at about 62 percent. When a stock’s RSI nears or reaches the 70 percent level it becomes overbought, which can be a sell signal for technical traders. The consolidation from Tuesday’s high-of-day has already helped to drop the RSI down from 68 percent.
Apple is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock is extended from the eight-day EMA by almost 3 percent, however, and if the stock trades sideways for a longer period of time the eight-day will catch up and could help to guide Apple higher.
Bulls want to see sideways consolidation and then for big bullish volume to come in and push the stock up over the previous all-time high, which could induce a blue-sky run. The only resistance above in the form of price history is $182.94.
Bears will want to watch for Apple to fall below the eight-day EMA, which will negate the bull flag pattern, or for the stock to form a bearish double top at the previous all-time high. Apple has support below at $177.71 and $174.33.
