Thursday, December 22nd, 2016

AAPL Large sized Head & Shoulders pattern?

Here is a daily chart of AAPL, see if you agree with the pattern.  Most Technicians would have varying opinions some out of disbelief, and some out of total conviction. But we need to put internal evaluations aside and look what the charts are telling us. The trend in AAPL is nothing but down for the past 2 months.

AAPL got bought up on 11/16 when it reversed, but the trend reversal is now negated because its rejection at 594 and its inability to retake 200 day moving average. Now we  have another bottom on 12/6 and the bounce is now questionable.

There is another technical reason and harbinger of bad news. The 50 day MA is crossing the 200 day MA from above, another bearish omen. That prevents buyers to take positions.

Fundamentally tax related selling seems to be most plausible reason here. There are other theories like lack of innovation and competition from Samsung and others. But those kind of things take a long time to develop and  the selling is not so focused, ferocious and concentrated.  This concentrated selling seems to be time fixated and quick  and urgent in nature ,where every bounce is met with a sell order.

Large institutions are selling ahead of the Jan 1 deadline due to the, Fiscal cliff scenario when the capital gains taxes go up from 15 % to 43% presumably. Till this stops expect any bounce to be shorted.

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