The daily timeframe of Apple, above, indicates that the stock’s decline off recent highs has been almost too orderly. When that happens, you tend to either see a huge spike out of the channel to the upside, or what we are seeing today with a gap lower, below the extremely well-defined downtrend channel. The change in price action usually suggests that most of the decline is over…for a few days or weeks.
However, as we look at the weekly timeframe, below, you can see the potential for a massive head and shoulders top after a weak bounce. Of course, bulls will argue the more important issue is that the rising 50 period weekly moving average (darker blue line) has been tremendous support since March 2009, and they would be correct.