Markets Bounce If Apple Bounces

In a couple of recent articles for Trader Planet I noted that Apple’s lack of relative strength has been a bearish ‘tell’ on the market as a whole. Although sales growth may be elusive for AAPL in 2016, it’s valuation, dividend and cash position qualify it to be given a pass, but alas, the stock is already in its own private bear market. 

If you trade or just observe AAPL intraday, however, you may have noticed that shares appear to be very coordinated with the general market. Last Friday AAPL was up almost 6% and out-performed the FANG stocks. In the short run we may see some follow-through and I think it all depends on AAPL.

That’s because on Friday AAPL reached the top of a significant volume resistance zone from October 2014. If shares can break above 102 and hold above it for a couple of hours, then 105-107 is the next target zone. There is little volume resistance for AAPL above 102. I call such a volume gap a “speed zone” as price tends to move very quickly when traversing it.

The company reports earnings on Tuesday after the closing bell. While several analysts have price targets on the stock well above $130, the short term chatter is quite bearish. With everyone expecting management to report poor guidance there’s potential for a surprise rally. 

That said, as you may be able to see from the inset on the accompanying chart published 1/15, AAPL has a date with destiny at $75. I have a great deal of conviction on this bearish call, which also means the general market is in serious trouble.

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