Apple (AAPL) has faced unusual adversity over the past few months. After topping out above $700, AAPL pulled in 200 points, piercing major support levels before putting in a potent reversal on November 16th with the rest of the market. Since then, the stock has shown relative strength and resumed its role as market leader. With the indices showing some weakness once again on fiscal cliff anxiety, we will be watching key levels in AAPL to measure the composure of the rally.
First, here is a breakdown of key levels for AAPL over the last few months. The stock put in a head and shoulders top from late August to the beginning of October and broke down hard through the neckline. The stock then broke an uptrend that had been in place since May before plummeting through its 200-day moving average on November 2nd. After its recent bounce, the key support level to watch today will be $574-576.
Another tool we use to measure the composure of a new fledgling rally is the Fibonacci retracement levels. AAPL is set to open lower this morning and likely fill its gap from Black Friday. The 25% Fibonacci retracement level of the rally from November 16th sits at $569, so that's another level we will be watching closely. If we break that, the 38.2% Fibonacci level sits at around $558, which coincides with support from the bottom of last Tuesday's candlestick.
AAPL has provided nice upside action since reversing, but is still below its 200-day moving average so it's not out of the woods. Don't be stubborn just because it's AAPL, but watch key levels for potential dip buying opportunities on this perennial winner.
We will be watching this potential AAPL opportunity closely live in the Virtual Trading Floor(R) this morning, where you can see all of our actual trades in real-time. We also cover AAPL regularly in our Off the Charts newsletter and morning Price Point Sheet.
*DISCLOSURES: Scott Redler is long GOOG, BAC, SLV, LEN, LULU, BAC. Short SPY.