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Apple set to move down from weekly divergences

September 26, 2012

26 September

This is a quick update on my article of 17 September on Apple.

The move down this week so far is significant for the following reasons. Where I mention weekly indicators, the move must be maintained by the end of the week to be valid.

  • The weekly RSI has moved back below 70, setting up the bearish divergence between the April and September highs
  • A weekly swing high will be formed from the last three weeks’ bars (ask me if you’re not sure what that means)
  • The 14 day RSI broke above 70 on 17 September, setting up a divergence against the August high
  • A daily RSI sell signal has now been given by a break below the intervening low from 11 September
  • We didn’t quite get my daily RSI criteria of a new price high with the RSI below 70 but the weekly criteria are more important

In my RSI divergence criteria, I state that the entry signal is a weekly close of the RSI below the intervening low. Here, the intervening low is an RSI of 53.4 from 18 May. That is quite a way lower and may require another down week to occur, making the risk/ reward less attractive.

In the next line in my criteria, I say that at times, a weekly bar reversal can be taken as an entry signal. I think, given the MACD confirmation and the relative strength (vs. the S&P500 Index) also showing an RSI divergence, that this is one of those times that a weekly reversal bar can be taken.


Open a short position in Apple at the end of this week if the current situation described above is maintained. Set the stop loss as a new high. The pre market price at the time of writing is $670, giving a stop loss 5.2% higher.

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