Apple (AAPL) - Mar 1st 2024
Has AAPL lost its mojo?
Bigger picture context
Apple used to be the reference for the market. The #1 stock that moved everything. On some occasions I would choose to watch AAPL itself instead of the SPY or the QQQ. It was just the stock that had the most weight in everything, so whatever it would do, the indices would follow.
This is no longer AAPL's market. It's NVDA's now, as the semiconductor sector is taking front stage and dictates the markets moves pretty much to the tick.
Last week AAPL started to break down an important support level and offered a fairly straightforward trade that's worth covering.
Weekly chart
While the Nasdaq (right) is making all-time highs, AAPL (left) is struggling to hold the $180 area. Just look at both charts for a second and see how AAPL doesn't appear to be that relevant anymore. Other names are carrying the index without the need of AAPL.
Goldman Sachs analysts recently removed this name from their Conviction List, followed by Evercore ISI who also removed the stock from its Tactical Outperform list. Notice the shift?
Daily chart
Huge respect to all those buyers who have been holding the line on the $180 area. Unfortunately for them, notice how every pop gets sold. The bounce trade doesn't seem to be working...
Hourly chart
Volatility contracting ahead of a potential explosive move to either side. The stock jumps towards EOD as there's news regarding Apple abandoning their EV project venture. However, that initial hype would soon fade.
Pre-market action
Price finally gave up on that support early in the pre-market, which is what brings this name to our attention. After a strong rejection around 8am, price is set to open below the $180 area.
The trade
As per usual, here's our CPT:
Cue(s)
Obvious relative weakness for the past few weeks
Daily downtrend, where every pop gets sold
$180 demand area broken in the pre-market
Intraday cue: Price breaking down the $180.12 with a double inside bearish bar
Plan
We have a level conveniently sitting at $180.12. This is going to be our reference for shorts, as many traders will probably be shorting the $180 psych. mark, which aligns with previous support.
If price shoots up and rejects we'll want to short the rejection immediately and risk high of day, just like we do with bounces.
In this case, price did shoot up but held above the level for a while, so there was no trade, until we got a double bearish inside bar breakdown triggering.
Trigger
Double bearish inside bar breakdown
5m chart
As mentioned, the stock does trade the $180.12 level but holds above for a while, so there's no point shorting yet as there's no rejection.
Luckily for us, price sets up a** double inside bar**, with both of these bars being pretty bearish and closing below the $180.12 level, which leads to a breakdown we can use to take our short position.
Price rejects the $180.12 again in the next bar and heads down, breaking the first level at $179.82 and slowly trading its way down.
You'll notice a huge wick to the upside a few bars later. That wick actually took place, it's not a chart error. Price traded above our $180.12 level for a moment. I'm not sure what happened, but it was very brief and soon came back down. In this short time window, once it was clear we were coming back down, there was just enough time to add to the put option position at lower prices.
Price then does indeed resume its downtrend and hits our target at $178.33. Except for that sudden wick, which again, was pretty quick, we'd consider this a low-stress trade.
There's a couple more entries later on rejections of the $178.33, but neither got any follow through unfortunately.
Closing notes
Are we witnessing the fall of Apple as the leader in tech innovation? Apple is yet to make a move in the AI domain. They are usually late to a lot of these ultra-hyped technologies, as they aim to provide seamless experiences to their users.
Question is: Will they deliver?
Time will tell.
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