With everything coming up roses for Greece and Shanghai yesterday, one might have missed the bearish implications of Apple’s 2% decline. A $2.50 selloff might not sound like much, but when added to the losses the stock has racked up since late April, it did some very serious technical damage to the daily chart. Specifically, the move generated the most powerful bearish impulse leg seen since November of 2012. That plunge confirmed a bear market that took seven months to run its course, cutting Apple’s value by 45%. If the current downtrend proves equally devastating, it would imply a fall to around $74 from a current $120.
If this is in fact what is about to happen, it would mean that the stock market as a whole has also entered a bear market. Apple is the world’s most valuable stock, and even when it is merely moving sideways, as has been the case since February, the broad averages have been unable to make any headway. Of course, AAPL could always surprise by whipping around and bounding to new all-time highs. But it seems unlikely in the context of the company’s latest product releases: a wristwatch that is not exactly setting the consumer electronics world on fire; and a belated entry into the streaming-music business that has relegated Apple to the unaccustomed position, behind Spotify, of second-best
One more note: The bearish impulse leg shown in the chart is still in progress and could conceivably exceed one or more additional lows before it is terminated by a strong rally. For now, however, each additional low surpassed without an upward correction would add to the implied power of the bear. The next such lows lie, respectively, at 116.08 (2/2/15); 109.03 (1/27/15); and 104.673 (1/6/15). I’ve set alerts at each and will keep you posted if the pace of this decline should accelerate.