AAPL Fails 200 DMA Test on Weekly Charts

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    Posted: 21 December 2008 10:34 AM

    Besides the inability to hold onto critical support at its 50 DMA currently at 96, AAPL failed the backtest of the 200 day moving averages on the weekly charts. And in the interim has fallen below its 20 day moving average. Very bearish action.

    AAPL bulls are going to find it increasingly difficult to move above these levels because volume is simply drying up, mostly due to massive redemptions with hedge funds and 401Ks. Unless something miraculous were to occur to boost the overall markets, I doubt they will be able to hold their 20s in the coming week, despite the bullish sentiment that usually accompanies this seasonality.

    The governments latest attempt at a stimulus with the auto-bailout had only temporary affect, and was soundly negated over the past two sessions. And AAPL has broken down through its bear rally uptrend line, which is now additional resistance.

    If we gap down on Monday, and lose the pivot point on the S&P of 880, it is very likely that a new round of intense selling will begin and over time we will retest the November lows. The probability that this will occur is quite high. Like I said, the only thing that could turn this around is something miraculous. But I fear that the Fed has run out of ammunition, and it’s becoming clear to investors that bailouts are nothing more than more debt piling onto the debt that got us in this predicament in the first place. The bailouts are exasperating the problem, not helping it.

    -ernie

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  • Posted: 21 December 2008 01:50 PM #1

    erntheburn - 21 December 2008 02:34 PM

    But I fear that the Fed has run out of ammunition, and it’s becoming clear to investors that bailouts are nothing more than more debt piling onto the debt that got us in this predicament in the first place. The bailouts are exasperating the problem, not helping it.

    -ernie

    Uh, yeah.

    Ern, tell us something we don’t know.

    The market’s response to the auto bailout was underwhelming at best and indicates a government misunderstanding of the sentiments of consumers. The biggest mistake the new Congress can make is thinking new members were elected because they were personally more popular (or more trusted) than their opponents.

    The bailouts to-date have done nothing to boost consumer confidence nor provided enterprises with pricing control.

    To think consumers en masse will now consider buying an American made car because of the bail-outs is laughable. It’s a trillion dollar boondoggle that has so far done little to nothing to deal with the core issues plaguing the economy.

    The Fed has spent its wad. Investors are risk-averse and the first calendar quarter will be messy at best for corporate earnings coming off a lackluster Christmas quarter.

    The best the incoming Obama Administration can do is a lot of jaw-boning in an effort to revive consumer confidence and promote enterprise spending.

         
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    Posted: 21 December 2008 04:33 PM #2

    The volume has dried up as it always does nearing a holiday. Volume will be even lighter next week, as it historically always is on any holiday shortened week. AAPL has steadily made a slightly higher LOD support the last 2 trading days in a row since the breakdown (88.02, 88.44, 88.80) caused by the Macworld fiasco unleashed AH on Tues. Had this news been handled better by Apple, the market and the media would not have overeacted. AAPL was on track to close Friday at 95 (max pain) even before this news so it was being positioned to break 96 no matter what. That number slipped on the SJ/MW news and instead was pinned at 90 for OE.  There will possibly be OE hangover on Monday morning after which we will break right out of 90. IMO, the LOD will be above Friday’s of 88.80.

    Any moves in the market next week will be exacerbated by the light volume. The bailout was settled last week by .gov because we are going into this holiday-shortened week. That means that provided the media (and Jim Cramer the Fud slinging clown) is sufficiently satisfied that SJ’s health is not a concern, coverage of this weekend’s retail sales will be the main spotlight. Gene Munster will have likely had his staff camped out at the Apple stores and will be making the rounds on the tube. Therefore I believe our moves in aapl will be exagerated to the upside.

    Regarding S&P, the market has also seen to it that It comeback and close above 885 on the last 4 days as well after .gov dropped the ball on the auto bailout the previous week. This is clearly support for a move upward not down. We’ll see what happens tomorrow.  :smilesanta:

    [ Edited: 21 December 2008 04:58 PM by kiwitrader ]      
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    Posted: 21 December 2008 11:58 PM #3

    ern can i just ask you to be a little more self critical? you write like you know what you’re talking about, when imho no one really knows what will happen, apart from probably getting worse before getting better. Have you tried doing a really careful analysis of all the comments you make here and comparing them with what actually happened to see what actual added value you bring? I mean comments like ‘if we gap down then intense selling will begin’ are kind of like zero information content when you think about it. If this is just chat to relieve stress i can understand it completely, but it sounds more like you are trying to make out you’re a serious analyst or something.

         
  • Posted: 22 December 2008 05:19 AM #4

    Nature abhors a vacuum, so does Ern. Noise reduces the vacuum. it is what it is.