Shares of Apple Are Likely to Rally Despite the 'Old News' Headline –


Apple (AAPL) is trading firmer this Monday morning ahead of the NYSE opening bell. There is a headline that “Apple China iPhone Sales Dive” but journalists and novice traders need to see that this is “old news” and the marketplace has recognized that – that is why prices are trading higher – this is the rear view mirror.

Let’s look at the most up to date news about APPL – the latest stock price.

In this daily bar chart of AAPL, below, we can see how prices have been recovering from their October-December slide. Prices have firmed from early January enough to establish an uptrend. AAPL has rallied above the now flat 50-day moving average line. The flat 200-day moving average line is about $20 above the current price action.

The daily On-Balance-Volume (OBV) line has been rising from late December signaling to us that buyers of AAPL have been more aggressive the past five to six weeks.

The trend-following Moving Average Convergence Divergence (MACD) oscillator generated two cover shorts signals in the November-January time frame and now it has crossed above the zero line for an outright go long signal.

In this weekly bar chart of AAPL, below, we can see that prices are below the declining 40-week moving average line. A weekly close above $190 is needed now to break this indicator.

The weekly OBV line shows improvement so far this year and the MACD oscillator has nearly crossed to the upside for a longer time-frame cover shorts signal.

In this Point and Figure chart of AAPL, below, we can see an upside price target of $216 being projected. If this target was reached it would mean that a lot of other buy signals had been generated, however, this is not a new all-time high (something to keep in mind).

Bottom line strategy: Successful traders need to watch the price action and how prices behave to news and not the news itself. A stock that does not decline on what appears to be bearish news is a strong stock that is focused ahead.

(Apple is a holding in Jim Cramer’s Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.)

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