Apple, Inc. (AAPL) has dropped nearly 10% from the March high of $361.67, which was set two weeks ago. Of any stock over the last two years, this one has been the poster child for a “buy the dip” philosophy. But is now the time to buy? Here are my thoughts..
Support at $326
The daily chart shows AAPL dropped about 4.5% in the recent session, closing the day just above the multi-month support level of $326, which has held throughout 2011 thus far. This is the level to watch for near-term responsive buying participation. If buyers cannot defend this level, we will likely see more weakness ahead.
There is double pivot support at $324.75, which includes the S2 (Floor) and L5 (Camarilla) pivots. If price can continue to hold above this zone, we could see buyers enter the market – much like what was seen in mid-January.
Otherwise, a violation of this zone could open the door to a price-probe in the low $300’s once again.
PEMA Support
The weekly chart offers an amazing view of potential support using the PEMA Method. Using pivot-based multiple moving averages, you see that every pull-back that tested the 34-period PEMA (the middle line) led to responsive buying participation over the last two years in this stock.
If price drops into the 34-period PEMA, take this as a major sign to buy this stock below value. Currently, the 34-period PEMA sits at about $312.40, but this level will fluctuate a bit by the time price reaches it.
If price does respond to the $312-15 zone with buying interest, I could see a very nice advance along the lines of an 80-point rally.
Stereotyping Market Days
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Let’s see how this one plays out!
Cheers!
Frank Ochoa
PivotBoss.com
Follow Frank on Twitter: http://twitter.com/PivotBoss
