Apple, Major Indexes Stuck in Sideways Holding Pattern

by: Zach Bass August 04, 2008 | about stocks: AAPL / IVV / QQQQ / SPY    

Zach Bass

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This is a tough call for swing traders and investors looking for an entry point right now, because there’s no conviction either with the Bears or the Bulls. But if you had to give it up to one of them, you would have to give it to the Bears. They have the downtrend on their side, as well as the 50-day moving average as resistance in both the S&P and the Naz.

The Bulls have negative sentiment, the MACD and the 20-day moving average for support, but they haven’t shown any conviction (i.e., volume) as of late in any move to take out the 50-DMA. In fact the Bulls have been rejected every time, during this latest upswing. As a result we’re in a channel between the 20s and 50s and we’re moving sideways.

AAPL isn’t in any better shape - there’s no moving average to support it, but there is strong price support and AAPL is teetering on uptrend support, if not hanging on by its finger nails. To add to the weakness, we have a slew of unflattering reports with the iPhone like the cracking case and the problems with MobileMe. Granted the cracks seem to be very limited, and MobileMe is said to have been repaired, but that won’t stop the media hounds from making hay with those stories.

At least the Steve Jobs health story has apparently been put to rest, according to Applelot.org poster, Howlongtoretire. Here’s a graphic he put together that shows Google search term trends of people’s interest in the issue.

Click to enlarge

So, what’s an investor/trader to do? I say sit down with your cash by your side. Because until we can take out the 50-DMA there’s no good case for getting bullish. With the S&P it’s going to be a long tough battle to get to the 50, which is at 1308.66. First it has to regain 1275 then 1300. It's going to need some serious giddy-up for that. The Naz needs to take out 2341 before it can think of attacking the 50-DMA at 2366.

 

Apple Investors have found the 162 level to be a major road block. We need to take that level out, then set the sights on 165. By the time we get there, the 200 and 20 DMAs will be waiting for us, and it will be a helluva battle to get through them. But without good volume it’s going to be difficult.

This is vacation time for many traders, including myself, so volume may be difficult to come by. At times like this, it’s best to go cash, and wait for things to improve. So go to the beach, relax, have some fun. That’s where I’ll be, with my iPhone at the ready.

Disclosure: long AAPL

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This article has 3 comments:

  •  
    Aug 04 08:19 AM
    Thanks, everyone loves AAPL so much it hard to find anyone who thinks the chart looks a bit weak, but if we were talking about a financial stock, resistance might be taken more seriously.
    Reply | Link to Comment
  •  
    Aug 04 09:13 AM
    you are on point ---might i add that october is the turning point for the run --so don't get too sunburned
    Reply | Link to Comment
  •  
    Aug 04 02:34 PM
    You'd think the wildly insane rumor of Foxconn producing 800,000 iPhones a week would make WS and investors sit up and take notice and help move Apple's share price up a tad. I don't think there are too many other companies in this economy that are ramping up their production lines well above current capacity or having a product in such high demand.

    We'll see if insatiable iPhone demand offsets the loss of iPod market share and force the analysts to revise their target prices. .... Nah!
    Reply | Link to Comment
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