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).
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.