Saturday, March 3, 2012

Bears may take bite out of Apple soon: $AAPL chart views

The stock of Apple ($AAPL) has been very bullish, but is moving closer to a level where it can start a real consolidation or correction. Many traders can sense it, so I've checked the Objective Elliott Wave count charts of Tony Caldaro (see below). There's a warning that it's reaching a top of some level, maybe quite significant. We'll look at that, and at potential targets for a pullback.

First though, take a quick look at the overall bullish P&F chart. Longer-term, after it corrects, it'll get bullish again. Price moved past the $464 target on this P&F version, which was based on the reversal method. Maybe that's why some started feeling bearish on it. However, there's a more "standard" version normally used by as their default, which is the "breakout" version. Actually, for Apple the P&F breakout method now sports a projection to $819! So keep that in mind, at least for the much longer term outlook. Meantime, if a correction soon is strong enough, it may show up as a reversal for an interim bearish target. That'll happen if the price goes under $530, i.e., perhaps more than 10%.

Below are the daily and weekly charts of $AAPL provided by Tony Caldaro in his public charts. You can always find them at his charts page link in his posts, at his OEW website These are marked as showing a major wave count in progress. Once major wave 5 is complete, it would also complete primary wave 5. That suggests the pullback may be more significant.

Tony's weekly chart shows three Fibonacci-based projections for major 5. The first one being around the $480's/$490's - that level indeed produced a "bobble" which fooled many traders into thinking that was the top. Well, that plus the parabolic acceleration in price. But neither Apple NPR the markets were ready. The next two projections lie in the area $557-$564, and $565. We're almost there. Price could tag that early next week, along with the overall stock market turn window we've been looking for. Look at Tony's charts:

I won't profess to be an expert on Tony's Objective Elliott Wave methods; I'm more schooled in original Elliott Wave, although I think Tony's methods are probably better. At any rate, it's evident he's looking for a major wave 5 to complete, probably soon since Apple's stock price is already close to $550. Judging by the wave count markings, it seems he's also thinking the major wave 5 would cap off a primary wave 5. That's even more significant. That could have price retest the major wave 4 lows, which would also fill a price gap (see Tony's daily chart above).

Given the strong price action, howver, price actually doesn't need to drop that far. It could find support around the $480's (wait for a break of $530 to confirm first), or possible that $464 level. Another level would be $440, but that wouldn't fill the price gap. In general, it's clear there's also good support in the $420's.

Apple is due to make major announcements next week about an expected iPad 3 launch. Might that be the sentiment catalyst if good news is already baked into the Apple price? Perhaps, unless that's also the news that pops the stock up into the $557-565 area. Either way, be on the lookout for a trading reversal. Personally, I think it's also interesting that price may hit a topping target in the $550's, because "55" is a common Fibonacci numeral that's used in cycles timing for short and long cycles.

If there's an alternative wave count, then perhaps it might be still working on a major 3, with major 5 (and primary V) up around the $819 area (also a Fibonacci number around 80/90). But I can't second-guess Tony's wave count. So I must tilt to the idea of price working toward such levels after the correction from the primary fifth wave.

And for Apple bulls, once the anticipated correction is complete, it should provide another great buying opportunity.

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