Apple Inc. Bulls Aren’t Out of the Woods

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It's decision time for Apple Inc. (NASDAQ: AAPL ) investors and it has nothing to do with current cool gadget offerings, or even the next, next big thing. It's the other technical bottom-line on AAPL stock's price chart which has this strategist concerned that the widely expected, seasonally jolly behavior could turn into investor folly. Let me explain.

Let's first state for the record, AAPL stock isn't alone in struggling the past month and losing its position of market leadership despite seemingly great reports ranging from earnings and iPhone X phone sales to bullish praise here, there and just about everywhere.

One need only look at other large cap tech stocks ranging from Intel Corporation (NASDAQ: INTC ), Facebook Inc (NASDAQ: FB ), Netflix, Inc. (NASDAQ: NFLX ) to see a rampant trend of modest profit-taking having unfolded of late after an impressive year for investors positioned in the group.

I suppose misery or simply sector rotations loves company?

The trillion-dollar question that remains is whether what's been an orderly pause of marginal consequence in AAPL stock might turn into more difficult price behavior. I don't have a crystal ball that offers always accurate forecasts. However, the price chart does hint strongly at a significant price decision in Apple shares is likely close at hand.

AAPL Stock Monthly Chart

A couple months ago I was cautious on AAPL stock as shares established a bearish-looking monthly chart candle near channel resistance coupled with a dollop of rhyming price symmetry and Fibonacci resistance levels.

Shares of AAPL have subsequently moved higher and caused some of our prior worry to fall by the wayside. The view is broken pattern resistance works to create underlying support and more demand for shares from bulls looking to play momentum to new highs and maybe some turncoat bears as well.

But Apple bulls aren't entirely out of the woods in our estimation. A monthly doji decision candle formed in November is still nestled at the top of our resistance area. As well, on the daily time frame AAPL stock has put together a series of lower highs and lows.

Net, net, until and if the daily chart pattern is broken, bears appear to have the edge, but I would stress using a technical stop in conjunction with a limited-risk options strategy. Bottom-line, a market cap of $884 billion could always turn into the market's first trillion dollar company and maybe even beat bitcoin to the punch.

AAPL Stock Long Put Spread

Given our view, bears hold the trading edge, but stressing it wouldn't take much to turn AAPL stock into a playable long position; I see a simple near-term bear put spread as appealing. A vertical like this reduces dollar exposure, as well as unwanted risks tied to Greeks and ensures the trader isn't reliant on a stop-loss to guard against additional losses.

Reviewing the Apple options board and shares at $172.22, the Weekly Jan 12 $165/$160 put spread for up to 60 cents is one favored combination. I like the strike placement as the spread has the opportunity to profit nicely if pressure starts to build in shares after putting in a pivot high this week.

At the same time, if the bearish pattern falters and fails to deliver new relative lows; this bear could always pivot to being a bull for no worse than 0.35% as conditions merit optimistically shifting sides.

Investment accounts under Christopher Tyler's management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual.. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits and feel free to click here to learn more about how to design better positions using options!

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The post Apple Inc. Bulls Aren't Out of the Woods appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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