3 Reasons Why Apple Has Bottomed
Kay Kim | Jul 27, 2016 12:22AM ET
Weekly-200SMA (Simple Moving Average) gauges long-term sentiment of the stock, so it is important to check them when the stock sees its correctional move.
If you are a long-term investor on any particular stock, you want to see the weekly-200SMA is rising and the stock is holding above that level if/when the correctional move happens (as long as it stays above it, there is a good chance the stock will move back up in the primary term).
2009 & 2013, both times, Apple (NASDAQ:AAPL) has bottomed and reversed back up after hitting the Weekly-200SMA, so it's definitely a level to watch for a possible bottoming action here as the stock is 'zig-zagging' here in the vicinity after hitting the moving average.
This is a classic technical analysis when it comes to assessing the major bottoming signals.
Bullish divergence occurs when the price-action cultivates lower lows after the decline, while the oscillators form higher lows (hence the word "divergence") as you can see in the chart below.
Again, in 2009 & 2013 we bottomed this way, and we are forming, yet, another bullish divergence here; not to mention we just covered weekly-200SMA also condoning this bullish divergence pattern in the vicinity.
I always say that Fib. 50% Retracement could be the "magic" number.
Back in 2013, it was the 50% retracement where the stock has bottomed.
Today, we are right on that 50% retracement and maybe it means nothing all by itself, but when you have the weekly-200SMA in the vicinity and the bullish divergence to fuel the flame,
I think we have a good chance that Apple (AAPL) is getting ready to get back up and cultivate an uptrend from here on (of course with minor-term ups and down--nothing goes straight up).
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