TECHNICAL ANALYSIS APPLE (AAPL) 20/12/2018

• In the Technical Analysis 10/12/2018 a disciplined ‘Stop Loss’ sell price was set and triggered at $165.
• The strategy now becomes a question of when to start rebuilding the position or having a level of confidence that the stock price has stopped the decline and will re-enter a new pattern.

There are five items that will signal and confirm a change.

1. Money Flow ‘gradual’ increase from a near ‘Oversold’ condition. This would reflect money coming into the stock. A fast rise or spike would be suspect.
2. Momentum turning upwards.
3. Price downtrend line broken with a move higher (possibly $165-$170) followed by a pullback above the downtrend line and a subsequent Higher Low’ price with some price stabilization
4. Trading volume needs to start declining. High volumes are a reflection of computer trading algorithms executing trades in milliseconds. Humans can’t compete.
5. On Balance Volume downtrend line has been broken. Need to see that line flatten and start to rise.

Why did the stock price pullback?

There always has to be a catalyst.

• December 19, 2018 the US Federal announced a 0.25% interest rate hike with a forecast of two further rate increases in 2018 (reduced from 3).
• The Fed expressed that the US economy was strong and there was a requirement to slow the economy which affects corresponding corporate profit growth.
• When combined with slowing growth in China, Germany and the Brexit uncertainty there is a concern of a global slowdown.

What does that mean at MONEYWISEHQ

Trying to catch an exact bottom won’t work, averaging down is a poor practice.

APPLE has had over $300B removed from it’s value. That is a massive amount of money which has come out over a period of two months and will take far longer to return. There is no sign of who had that much money invested or where it has gone, China or the sidelines, but it has not rotated into other stocks as would be normal in a single stock/sector decline. There is something bigger going on.

In a trading strategy, there has to be movement down and then up. Apple’s trend has been down, so the stock is not a trading candidate.

Apple has a one of the strongest Investment Thesis’ for long term investors however shares added as an investment should only be done in small increments at a target price with a disciplined ‘Stop Loss’. It is better to take a small loss and wait for a better opportunity than to allow it to roll into a bigger loss.

At MONEYWISEHQ we look for investments or trades in the best quality companies that have the highest probability of success with the lowest risk and with Apple that means waiting for a confirmed change in trend.