Is Apple setting up a head and shoulders top?

Last week I wrote that Apple might be about to fall through resistance at the 200 day moving average of $590.  Well, did it ever.  The price is currently $546 and falling.

Last week’s post I noted another possibility: that Apple is setting up for a head and shoulders top.  This week’s decline supports this theory.  If true, this would see Apple retreat to it’s 17th May low of $530.12 (down a further 3%) before running up to around $630 (a 19% advance).

Image

If this is true then the trade would be to wait until the stock has put in a bottom around $530 (shown as a black horizontal line in the chart above) and then buy.  Then sell when the price puts in a top around $630.  The top should come two or three months after the bottom.

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