With quarterly earnings for the iconic Apple tomorrow, it’s a good time to consider the weekly chart for the stock which closed last week’s trading session at $207.74 per share, and from a technical perspective there are several aspects which require more detailed analysis in order to reach any firm conclusions regarding the longer term direction for the stock.
The first of these is the volume associated with the move higher since late May, and the issue here is the general decline in volume as the stock has advanced higher. The initial breakaway from the volume point of control, denoted with the yellow dashed line, was well above average and confirming this as a genuine move rather than a fakeout, with subsequent volume in June helping to confirm the bullish sentiment. However, since then the volume has declined along with price spreads which have narrowed. This was also the case with last week’s price action with volume average on a narrow spread candle and whilst this is a combination of seasonal effects and waiting for the release this week, nevertheless we have a rising market on falling volume which looks weak.
In terms of levels ahead, there are two to consider, the first price based, and the other volume. On the volume point of control histogram, we have a low volume node ahead between $210 and $214 per share before reverting to a high volume node at $215 and beyond. This also coincides with a level of price based resistance, albeit relatively minor, at $215 and denoted with the red dashed line. And whilst minor is significant as it was where the stock reversed sharply in May before subsequently finding support at the volume point of control (the thick yellow hatched line).
Overall then, a relatively weak technical picture for Apple and one which will only change should the rally continue with an injection of meaningful volume which may come this week on the earnings. If not, the stock looks set to congest and weaken at the current level.
Finally, we also have to read this analysis in the context of what is happening with the US-China trade talks as Apple is acutely sensitive to what may or not be agreed. There are also two further factors likely to cause problems with Apple. The first is Apple’s decision to move production of the new Mac Pro to China, a move recently criticised by Donald Trump who also stated the company would not be given a Tariff waiver. The second is China’s monopoly of rare earth minerals which threatens to open a new front on the trade war. The issue for Apple is the extensive use of these minerals in the iPhone although Apple did state in 2017 it would ‘one day’ move to recycled material, though this has yet to become a reality. Given this background, it is no surprise to see such indecision and potential weakness in the price chart.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
Leave a Reply