alexp

Difficult situation with Apple

BATS:AAPL   APPLE INC
378 0 0
It's very hard to choose a direction here. There are both bull and bear cases for AAPL             here and it's all about who will be getting stronger. It looks like bears are stronger long term, but bulls still have enough force to push it up a bit before bears finally take the control. However, I believe that most likely result of this fight is stock trading in sideways-to-down trading range for a few weeks before any strong reversal attempts are taken by the bulls.

Bear case:

1) Strong bear channel with previous failed attempt to break
2) Measured move target & a major support around 560-570 are still a strong magnet
3) Strong bear case on weekly and monthly charts

Bull case:

1) Arguably a final flag of a bear trend has been recently formed
2) Second attempts to break below the trend channel line have a higher probability of a reversal (however, such attempt is still due)
3) A reversal bar is formed exactly at .618 fib level, so it seems like there is some support there (although reversal bar is still bearish and has prominent upper tail, hence, second confirmation will still be needed before entering long on this set up)
4) A possible 3 push wedge pattern just formed (which usually results in 2 legged reversal for at least 10 bars)

Important thing to remember: channels usually end up with trading ranges (sideways trading)!

So we have a number of possible scenarios here:

1) Bulls push up to around 625-630 area on wedge and recent final flag and then bears take control and push down to 560-570 area or even to 520 higher low breakout test
2) Bears push a bit down to around 580 area in order to break through the channel trend line and then bulls take control and push up 620-630 area and then stock gets into trading range sideways-to-down mode
3) Bears continue pushing down in a bear channel ignoring all bull attempts to reverse
4) Stock gets into sideways-to-down trading gradually reaching 560-570 area sometime before Xmas            

Let's see. As for now, I believe it's too dangerous to get into any of the sides and better to stay flat here and wait for some more clear price action.
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