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The “island top” formation on the daily chart of Apple has been discussed in other areas of the financial blogosphere for the better part of a week. After a prior move higher, when a gap up occurs that is then followed by a cluster of candles essentially going sideways, a subsequent high volume gap lower below the cluster raises the specter of a rare but powerful topping formation. The “island,” consisting of the cluster of those candles, may very well become deserted, never to be occupied again, or something to that effect.
I have previously discussed the idea that the monthly chart of Apple leaves it quite prone to late-stage base failure since its 2009 bear market bottom. Note that is not the same as calling a generational top to Apple. Instead, a multi-month period of resetting the base count may be all that is needed. Nonetheless, the rising price channel on the monthly, as you can see on the second chart below, continues to look ominous.
Beyond the textbook island top reversal pattern at play, just looking up the elements of that formation on your iPhone is insufficient. In this case, as usual, the market is making it tough for all parties involved. The island top has in no way been negated, yet the bears have not commenced the penalty phase. Instead, the jury is still out on this consolidation, not unlike what we briefly saw in silver last spring after the initial leg lower, followed by the eventual roll over which was much more potent. $390 is a big level of support for Apple, within the context of this consolidation and island top, and below it I think there is a high probability short setup.
The Apple bulls, or “fanboys” en parlance, have done an excellent job of defending this stock the whole way up, not just in terms of witty banter but with respect to price action. Like all things in life, though, the only permanent thing is impermanence. Let’s see if they can pull the virtual rabbit out of the “app” one more time.
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Is it just me or is there a head and shoulders pattern going on with AAPL right now?
Yes. That could be a “double-head” dating back to late-September. Working on a rt shoulder now.
I fucking despise Apple and would love nothing more then the complete destruction of all the idiot Apple fan boys.
Fact of the matter is Apple is getting attacked from all sides. Android is eating market share on one side, while Amazon and a wave of techs are jumping on the tablet bandwagon. On top of that Windows 7 is fucking fabulous and who the fuck in their right mind is going to buy a $2000 Macbook when they are unemployed and living in the streets?
I’ve been watching AAPL’s broadening top(or what I think is a broadening top) for quite some time now. It’s interesting that it also seems to have the characteristics of other topping formations.
Anyways…Fuck Apple.
True. It could be a perfect storm.
When is the last time you’ve looked at AAPL products? A $2000 macbook? What is this 2005?
You’ll never be able to predict the future accurately if you blindly choose sides; you’ll only get it right half of the time.
Pardon me?
http://store.apple.com/us/browse/home/shop_mac/family/macbook_pro?aid=AIC-WWW-NAUS-K2-BUYNOW-MACBOOKPRO-INDEX&cp=BUYNOW-MACBOOKPRO-INDEX
$2000 MAC book or not…That is beside the point. Anyway. Continue buying APPL on the way down, hope you have fun.
Who the fuck would buy anything less then a 17 inch laptop?