A Look at Apple As This Bellwether Indicator Consolidates The Stock

In line with the overall market, which saw the S&P 500 dip off the open before rallying to trade flat, Apple Inc. (NASDAQ: AAPL) opened down on Monday, sliding 0.75% to start the trading day.

Since November 14, the tech giant's price has generally moved sideways while consolidating below the 200-day simple moving average (SMA).

Lower-than-average volume across the major indices during the holiday-shortened week may indicate further consolidation is possible before a significant move in either direction.

It is crucial to use the 200-day SMA as a bellwether. Technical analysts and investors define a bull cycle as a stock trading above the level on the daily chart, while a bear cycle is defined as a stock trading below the 200-day SMA.

In technical analysis, the 50-day SMA is also significant, particularly when combined with the 200-day. A death cross occurs when the 50-day SMA crosses below the 200-day SMA, and a bullish golden cross occurs when the 50-day SMA crosses above the 200-day SMA.

Additionally, the S&P 500 has been trading below the 200-day SMA, as Benzinga said will probably occur for a while on November 13. The S&P 500 might move in the same direction as Apple if it can retake the area as support.

The Apple Chart: On October 21, Apple bullishly broke out of a falling channel pattern and experienced a brief bull cycle before beginning a new bear cycle. The stock challenged the upper trendline of the channel as support at the bottom of the most recent bear cycle, which concluded on November 9, and then turned around into another uptrend.

The stock of Apple has been consolidating ever since the rally pushed it to just below the 200-day SMA. On the daily chart, the stock may have entered a bull flag pattern as a result of the uptrend combined with the consolidation, which resulted in a measured move of roughly 14%.

Apple might climb as high as $167 if the bull flag pattern is broken, according to the calculated move. The pattern will be invalidated if the stock closes a trading day below the eight-day exponential moving average or trades lower for a few more days within the flag pattern without breaking through the upper trendline.

The lower wick may signal a bounce on Tuesday if Apple ends the trading day above $149.20. Apple will produce a bearish Marubozu candlestick if the stock closes the trading day near the day's low, which may be a sign that prices are about to decline.

Apple has support below at $146.41 and $143.51 and resistance above at $150 and $153.92.