Primary Chart: AAPL's Parallel Channel and Key Trendlines with Fibonacci Retracements from November 4 Swing Low to November 15 Swing High
SUMMARY:
AAPL appears to have begun a leg lower in earnest, along with SPX. A break below $140.35 will help confirm.
SPX broke below its recent swing low on November 29, 2022, which is consistent with AAPL's failure at its trendline and push lower after this rejection.
The short-term PT zone = $128-$134 range.
Whether AAPL and SPX are heading to new lows yet is unclear. So let's take this one level at a time. December 2022 could be choppy with many market participants buying dips hoping for a Santa Rally. It may be tough sledding—or it may be straight to new lows. Does anyone have a crystal ball?
AAPL appears to have begun a leg lower in earnest. The most that can be said in the short term is that AAPL is heading back to the lower edge of its trading range. SquishTrade suspects that will be broken in the intermediate-term future, but until it is broken, the lower edge of the trading range at $128-$134 will be the target.
A much more detailed technical analysis of AAPL was posted on , linked below in Supplementary Chart A (November 5 analysis). In summary, the longer-term view for AAPL remains negative. Several downside PTs are listed in the November 5 analysis—please refer to it for further reading on the broader picture in AAPL.
Supplementary Chart A (Prior November 5 Analysis of AAPL)
The shorter-term case for downside is supported by several factors. First, price was resoundingly rejected (on a log chart) at the downward TL (yellow) from mid-August 2022 swing highs. See Supplementary Chart B. Price has also broken through a few key short-term Fibonacci levels shown in Supplementary Chart B.
Supplementary Chart B:
In addition, please notice on Supplementary Chart B another technical phenomenon. Price formed a Pinocchio bar, which SquishTrade has discussed in past technical analyses. Sometimes these work well. Basically, a long upper or lower wick pierces a key level or trendline, which represents a false move. For a more detailed discussion of a Pinocchio bar, or a false break / whipsaw move, please read SquishTrade's prior posts on this subject and . Both prior Pinocchio bars worked exactly as expected. But this does not mean that all Pinocchio bars will represent exhaustion. So far, AAPL's Pinocchio bar above the yellow TL from mid-August 2022 highs has been working.
But AAPL has remained very choppy this year, which is part of the reason why SquishTrade does not want to commit yet to the view that a much larger downside leg is underway right now. That leg may be coming next year, however, or it may have started already. It's still unclear. For the time being, it helps to take this one level at a time. Technicals point to further weakness and downside ahead, and the best PT SquishTrade sees at this time is $128-$134 PT. And this PT range represents prior lows from October and November 2022 ($134 area) as well as the lower edge of the parallel channel ($128-$129).
Second, price retraced to the .786 retracement of its recent downward swing from November 15-29, 2022. But price failed at that key retracement. See Supplementary Chart C below:
Supplementary Chart C:
Third, refer back to the Primary Chart above. The gap fill area lies around $138-$140. The .786 retracement also lies near this level (the .786 retracement of the Nov. 4-15 rally—price has traded within the range of this rally for over two weeks, which is why that remains important). In any case, this $138-$140 area presents short-term supports, i.e., obstacles (or conditions precedent) to AAPL reaching the $128-$134 PT above. AAPL could bounce at this $138-$140 area perhaps, so evaluate the bounce and consider whether that may be weak enough to return and break through this area when the bounce completes.
As always, trade in accordance with a set of rules and your overall trading system, with risk management being the most important part. SquishTrade attempts to provide technical analyses that present a perspective on the price action in indices and various securities but does not purport to provide actual trading signals. Some may prefer to wait, for example, for a bounce (if one occurs) before entering any shorts.
Thanks for reading. Let me know what you think too.
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Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed.
Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders.
DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Comment
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Ichimoku Cloud on AAPL's daily chart below. This complements the ideas discussed above. Price on daily just failed at cloud resistance. Cloud is red and trending down. Price also broke below the Kijun line (blue) today. But often when price breaks that line, it backtests it similar to the way price backtests a breakout of another technical pattern.
On the Ichimoku weekly chart below, AAPL had a chance to break above the weekly could where a twist appeared on the week of Nov. 28. But despite the major rally off 10/13 lows, AAPL's rally largely failed at the weekly cloud. Further, AAPL remains below both its Kijun line and its Tenkan line (the gold colored one).
Comment
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For traders who see the bearish side of AAPL based on their own research as well, ST would like to reemphasize a point made in the main post above—price can bounce in the $138-$141 range given many support levels in this area. Depending on how the bounce behaves, and whether that bounce looks weak at resistance, it may be worth considering a short off the *bounce* rather than shorting immediately at these levels. This may be intuitive for many experienced and intermediate traders / chart watchers.
Price has now sold off hard for two days since AAPL hit the downward sloping TL shown on the main chart. Today (12/6/22) was a -2.54% down day. Monday was almost -1.0% down. So price is down about -3.5% since the high at the start of the week.
Today, price bounced off the .618 Fibonacci level at $141.72 (well, the low of the day was $141.92. In any case, bounces can occur here, or even a bit lower at $138-$141, where a gap fill area lies (as discussed above), and the .786 Fibonacci retracement at $138.28.
Comment
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On Dec. 7, price fell down to the support zone shown on the primary chart at $138-$140. Price tagged the $140 level. Price also recovered back above the .618 R. That represents a failed breakdown. In the short term, this can be viewed as a somewhat reliable bullish signal. This means AAPL may consolidate and/or move back to the upper down TL for now.
In broader terms, AAPL remains in the range identified in this post and prior ones.
Comment
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Short version: Price has now filled the gap discussed in the main post at $138-$140. Price is reaching intraday lows of $137.70. AAPL has made excellent progress toward the initial target zone of $128-$134.
In the last update on Dec. 8, AAPL reached a major support at $140. Then price recovered above the .618 R shown on the chart in that update ($141.42). ST noted that this "failed breakdown" was a somewhat reliable *short-term* bullish signal. Price bounced all the way from that failed breakdown at $140-$141 up to $149.97, right back to the down TL. That was a 6.36% gain from the failed breakdown.
Then price showed a failed breakout above the down TL just as market participants on social media started getting excessively bullish about a potential Fed pivot. The Fed didn't pivot. Price experienced a failed breakout above the down TL drawn from August 17 highs.
This failed breakout showed weakness and bearish potential unless it was negated immediately. Price has now reached the gap fill area discussed of $138-$140. Wouldn't be surprised to see consolidation here, or perhaps a bit lower before consolidation would make sense too.
Trade closed: target reached
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AAPL reached $134 quicker than expected towards the first target zone of $128-$134. It reached $134.36 as the intraday low so far today after breaking the gap fill / Fibonacci support area earlier this week at $138-$140.
Trade closed: target reached
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The target was reached, but the intraday low from earlier was undercut somewhat. The intraday low as of the close was $133.73.
This shorter term analysis will be closed, but another longer-term AAPL analysis remains open and will continue to be updated. That idea is linked here:
Really great, thanks Squish! Learning a lot from your analysis. Interesting times ahead, I personally don't think we see the Santa Rally everyone's hoping/waiting for! Let's see!
SquishTrade
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@mr5neak, Thanks so much for reading and commenting. :) Your encouragement and support is very much appreciated!
Your view on the Santa rally makes sense. I agree with you for the most part, meaning I would be surprised if we had a major Santa Rally. But markets have been surprising me all year and I've been a bear for most of this year! Tough for bears and bulls alike.
My point earlier about the Santa rally was pure speculation -- the idea being that many expect that rally so they might try to buy dips with that expectation of a year-end rally (or with year end seasonality as a tailwind). If dip buyers come out in force, could this make price action fairly choppy -- ups and downs rather than trending action? Perhaps. But that's just a hypothesis. This year has already been super challenging and unpredictable, with many wild and volatile swings in both directions. Some market commentators are posting charts / data showing that the Santa Rally tends *not* to occur in years where there has been a strong bear for over half the year. This supports your view that you don't think the Santa Rally happens. And I feel that this is probably right. But if prices start breaking major levels to the upside and acting strong again, I'm not going to fight that rally on grounds that history says it shouldn't occur. Hope that makes sense. I've also seen historical data on midterm election years, and data on years where inflation peaked. The results are mixed. Bottom line -- macro (inflation, rates, economic weakness) point to further weakness at some point. The technicals are still bearish for now, and until that changes, I'm looking at the charts bearishly . . .
Tolberti
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Amazing detailed idea, I like it! I think start of the next year will be very important.
Great job, mate! Totally agree with your vision, but next time I would like to see a more detailed description.
SquishTrade
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@TradingStat, You wrote "I would like to see a more detailed description." Is this a spam comment? Or did you actually read this from start to finish and wish for more detail? What details specifically would you like?
AtlasTrades
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Your aapl idea seems to be pretty accurate, I also have the same view, thank you.