Another Chance to Own Apple

Readers send in hundreds of emails to Wyatt Investment Research each week and Apple (NASDAQ: AAPL) is far and away the most popular subject. I can’t blame readers for their inquiries. AAPL is a popular company, if not the most popular – well, maybe Facebook (NASDAQ: FB) is at the moment … but that’s likely a temporary thing.  When Facebook rallies 77% in five months like Apple did recently, maybe they’ll be in the running.  But until then …

The big question readers are posing now is, “When can I buy Apple?”

Investors are hungry to own AAPL stock, which is why I’ve covered it so many times of late. In a recent video – “It’s Not Too Late to Own Apple and Here’s Why” – I mentioned how important it was for the bulls to support for the shares at $600. I also mentioned that should $600 break, the stock was heading to $520 and that the breakdown would coincide with a large market pullback.

Of course, Apple lost $600 support hours after that video was published. Additionally, our worst-case scenario unfolded. Apple declined 13% and tagged $522.18 on May 18 while the Nasdaq fell 9% from 3,045 to 2,774.

The failure to hold $600 a few weeks ago likely means that Apple has ended its bullish phase that saw the stock rally 77% from $363 to $644 in just five months. However, I suspect AAPL will hold $500 over the next three months and eventually push well above $700 and to new highs by the end of the year.

For the next four months, look for the shares to trade in a range between $515 and $619 (blue lines in the chart). Traders should be wary of potential strong resistance at $619 and $590, the site of the flat 50-day moving average (orange line).

Strong support exists at $525 and I expect $515 will develop into a zone of support should $525 crack. AAPL also remains 22% above its 200-day moving average (black line), which is hovering above the $460 level.

Though the long-term trend favors more upside for Apple, bearish traders can profit in the near term. Investors interested in owning shares can take a new position below $545. Bearish traders may take short positions above $600.

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