The Magnificent One

Forget about the Magnificent Seven. Let's look at the Magnificent One - AAPL. One question this chart answers is, "How long can a stock stay overbought?" As the RSI on this yearly chart shows, "Years, apparently!".

AAPL - Yearly - Diagonal & Channel

As APPL approaches the $200 range we can also note that from its 1982 low to its 2003 low is a remarkable Fibonacci 21 years in time. But we also note from this 2003 low to a 2024 high would also be another remarkable Fibonacci 21 years. 

After starting with an expanding diagonal, likely for a first wave ①), there has been a Fibonacci 2 times rise - based on log charting - and price is again headed for the upper channel line in what is probably still wave ③. At some point the vaunted stock will begin at least a wave ④ and might head back towards the lower channel line. Then, a move back to $30 - 50 does not seem unreasonable based on the log channel shown.

If, at some point, this should happen, the question is what would happen to U.S. stock indexes because this darling is such a large part of almost every equity manager's portfolio. Maybe not today. Some day soon? It depends what your definition of soon is. 

Meanwhile, let's look at the weekly chart of APPL. Here we see a similar up channel in arithmetic scale.

AAPL - Weekly - Recently Overbought But No Divergence

APPL's weekly RSI has gone overbought in the last few weeks. But, as the channel indicates, a move back down to the $170 to $180 range could happen at any time without doing structural damage to the parallel. We just note there is no divergence yet at the high on this chart. 

Yet, typically, an Elliott Wave move ends with a 'five-wave-sequence', even if the five waves are part of a larger C wave, or even if the fifth wave fails. Noting there is no solid evidence yet for even a Minor 4th wave, it does not seem reasonable yet to suggest an ending diagonal for this stock. There just isn't downward movement enough to support such a conclusion at this time. 

But now it is at least time (meaning from now to within a few weeks/months) to get our antennae up to look for a fourth wave, at least. And what happens if one goes down to the daily price chart, as below?

AAPL - Daily - Recently Overbought But No Divergence

Here again we see some prominent features. There are recently both a parallel channel and two over-bought locations of the RSI (at the down arrows). This is suggestive of both a first and a third minute wave on the daily time frame. And it looks like a minute fourth wave has begun, as we've suggested for both the NQ and the ES futures. AAPL's recent up gap has been filled which is one lone suggestion of a loss of momentum. But, as yet a fourth wave looks incomplete as it would be very short in time.

Still, based on the parallel, there seems to be no reason why APPL couldn't eventually reach a $200 price, perhaps on earnings, and that would be telling for all three price time frames. Considering price has recently been as high as $194+ this does not seem like a huge stretch for The Magnificent One.

What the rest of the market does (sectors that don't contain AAPL stock) is a different matter. 

On a separate note, the high yield bond ETF (HYG) hasn't made a higher weekly high since September 2021. And it has recently broken it's daily up trend line lower. Here is the chart being referred to.

HYG (High Yield Bond ETF) - Daily - Break of Up Trend Line

Hmm.

Have an excellent rest of the weekend.

TraderJoe