Will Apple's Shares Lead The Next Charge?

February 21, 2019

AAPL, not long ago the one true love of fund managers, has been a conspicuous laggard since the broad averages trampolined off December’s lows. It is only in retrospect that we can see how they might have contrived, albeit with only modest success, to ignore the stock’s big problem, which is that the company’s ridiculously overpriced phones are poorly positioned to compete against increasingly aggressive Asian manufacturers. Factor in a U.S. economic slowdown that has lengthened iPhone’s replacement cycle, and you begin to see why AAPL is unlikely to lead the stock market to new record highs. It could still be a good go-along bet, though, in which case I’d suggest using 187.74 as a minimum upside target for the near term. That would represent a 50% retracement of the slide from a record $233 in October to a bear market low of $142 early in 2019. A rally to 187 presumably would give way to another leg down, since the Q4 plunge created an impulse leg on the weekly chart that demands an eventual follow-through leg. If and when the other shoe drops, we’ll have a ‘midpoint Hidden Pivot’ along the C-D leg to tell us exactly what’s on traders’ minds. For now, though, despite the stock’s heaviness, a bullish bias is warranted.

______ UPDATE (Feb 20, 10:39 p.m.): AAPL stalled precisely at the 173.24 Hidden Pivot midpoint of the pattern shown, validating not only the pattern but its 178.06target. It will become a very good bet to be reached if and when the stock blows past ‘p’. This matters a great deal, since it could not but energize the broad averages in their quest to turn what is still a garden variety bear rally into a push toward new all-time highs. Considering the recent shakeup at the company and Apple’s heavy reliance on iPhone sales for most of its revenues, the timing of such a resurgence would warrant our utmost caution, if not to say skepticism. 

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