Apple Inc. ( AAPL ) - I last covered AAPL stock as the Trade of the Day on Feb. 10 , saying shares were oversold and due for a bounce. I recommended readers buy at $94 to $95 with an initial target of $110. That target was hit on March 30, returning more than 15% in less than two months.
In my Feb. 10 recommendation, I said my ultimate target for AAPL stock was a run to $117, which represented the 200-day moving average at the time. But shares failed at their 200-day shortly after the late-March high, and with a number of other bearish signs on the chart, it appears time to short AAPL stock.
In addition to technical problems, there is little for investors to get excited about following Apple's 2016 Worldwide Developer Conference (WWDC) last week. Incremental changes seem to be the name of the game with a thinner MacBook and iPhone (without a headphone jack), a "better" Siri, "more convenient" Apple Pay and faster Apple Watch.
Turning back to the chart, AAPL stock is trading in a bear channel with about 15 points between support and resistance. The resistance line is drawn from the right high of a triple-top made in July and connects with two failed advances. It also connects failed penetrations of the 200-day moving average.
In early June, AAPL stock also failed at the 50-day moving average. The MACD indicator flashed a sell signal on Friday, and selling volume has been exceeding buying volume for weeks.
Traders should look to sell AAPL stock short at $95 with a downside target of $80 within 90 days for a potential return of 16%. A stop-loss order should be entered at $101, just above the 50-day moving average, to protect against theoretically unlimited losses in the event of a rally.
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