Apple Inc. stock is up more than 10 percent since the lows of last month. Much of that bounce could be attributed to the excitement surrounding billionaire investor Warren Buffett’s recent acquisition of a huge stake in the tech giant.
And a look at technical charts indicate that the current rally could gather steam if shares manage to break out above $100.50.
Apple Inc. Bulls in Control?
A look at the daily price chart of Apple depicts the story of a stock that is trying to claw its way back in to the focus of Wall Street. After spending most of last year in oblivion, shares are finally beginning to show some life.
The area around $100 is the immediate resistance. AAPL reversed from that zone multiple times in the past – the most recent being late last month. However, the pullback could not sustain after bulls intervened to halt the slide at $98.
Traders with a short term view can look to go long on a close above $100.50 on above average volumes. $98 looks like a nice spot to place stop losses. The immediate target should be a rise to $106, which coincides with the 200 day moving average. If the momentum remains intact, $110 also can’t be ruled out.
However, traders need to remember that this will be a counter trend trade as Apple is still in a bear market. As such, trailing the stop loss in the event of price moving higher would be the prudent thing to do.
Broader Markets Need to Support Apple Inc. Surge
Since stocks seldom buck the broader trend, for Apple to continue rallying, the markets also need to play their part. Wall Street has been eagerly waiting to see if the S&P 500 Index pierces through its all-time high of 2132.
Thursday was the first down day of this week, and the sell-off wasn’t entirely negative, according to T3Live.com’s Scott Redler. “It burnt off some of the overbought conditions. The market was definitely overbought,” he said on CNBC.
Redler went on to add that the S&P holding above 2010 was in fact positive for the markets, whose next leg higher should be lead by tech stocks.
“The next move for the bulls will be to take out 2132 with authority. Every time the bears have a chance to take the ball back, they blow it,” he further noted.
The key data to watch out on Friday is Baker Hughes’ U.S. oil rig count. Scheduled for release at 1 PM ET, it comes at a time when crude is trading above $51 for the first time since July of last year.