AAPL – Apple, Inc. – The designer and manufacturer of consumer electronics and software products has seen its shares raising above the main bearish resistance line turning its outlook to bullish. Since December 07 peak at $202.00 we observed a severe decline defined by “Long Tail Down” patterns that after breaking the main support line at $153.00 and reversing the main trend led prices to reach in February 08 the $116.00 level where a solid support was found. The powerful reaction that followed temporarily resumed the uptrend failing to break above the previous top though and bouncing back the $192.00 level developing a bearish pattern of decreasing tops. The penetration to the downside of the main support line at $163.00 reinstated the bearish trend in September 08 opening wide for an unrelenting downtrend. A double bottom in the area $79.00/$80.00 signaled that a turnaround was in place. The 6 months long sideways trading comprised in the range $80.00/$103.00 ended with last month’s “Long Tail Up” pattern which passed through the resistance level at $103.00. The triple top breakout at $110.00 and the violation of the main resistance line at $118.00 reversed officially the trend to the upside. Prices are supported by a positive Relative Strength Vs the market classifying Apple as an outperformer. Due to the overbought condition we are expecting prices to retrace towards the intermediate support line in the next sessions before resuming the uptrend. Hold on for the likely pull back to the $110.00/$112.00 area before opening new longs. Upside targets are set first at $148.00 and then at $161.00. On the downside lighten at double bottom breakout at $102.00 and close all long positions at penetration of the main support line with possible contraction back to the lows at $80.00.
MHP - McGraw-Hill Companies - Global publisher and provider of financial, information and media services, McGraw-Hill emerges above key resistance level at $26.00 after a semester of sideways trading. Relative Strength Vs the market is also positive promising a bright future. From the top at $72.50 of June 07 prices weakened breaking the main support line at $67.75 and the double bottom breakout at $67.00 confirmed the outlook reversal to bearish. The downtrend rolled out finding early support at $45.50 before a new wave of decline encountered some buying at $34.00 level. The March to September 08 sideways trading within the range $35.00/$45.00 resolved to the upside with the “High Pole” pattern at $47.00 which reversing back to the downside turned out being a “Bull Trap” pattern. The final sharp selloff set the lows at $17.25. After few months of sideways trading prices started recently to develop a pattern of “Higher Lows” and last week breakout of the key resistance level at $26.00 gave the signal of an impending turnaround. Prices have now approached the main resistance line at $29.75 where we expect a temporary pull back before seeing a convincing attempt of trend line penetration. The weight of the evidence is slowly shifting towards the bullish side although I suggest to open long positions only after violation of the main resistance line now positioned at $30.75 with a projected upside target at $37.40. On the downside lighten at double bottom breakout at $24.00 and close all long positions at double bottom breakout at $22.00.
GEG - Global Power Equipment Group, Inc. – Shares of the leading provider of power generation equipment and maintenance services strengthen above the intermediate support line foreseeing a promising future. From the April 05 market’s debut prices made a double top at $9.50 before entering into a steep decline that retraced to $2.00 burning nearly 80% of the stock value. The reaction from the lows developed into a “Long Tail Up” pattern which after breaking the main resistance line at $7.00 ran swiftly to set in March 07 the all time high at $26.75. After 18 months of sideways trading a pattern of “Lower Lows” developed shrinking prices to $17.75, $15.50 and $14.00 respectively. The upside reaction caused by the oversold condition gained back some ground to $24.50 level before starting a sharp downtrend which penetrating the main support line temporary reversed the main trend from bullish to bearish reaching in March 09 the $12.50 support. A “Long Tail Up” pattern turned the tide again and the double top breakout at $20.50 sealed up the new reversal to the upside. Last week saw also the development of a triple top breakout at $20.75, a complex pattern that adds more weight to the bullish evidence. Relative Strength Vs the market is positive making it a likely outperformer. Long positions should be taken with medium term target at $33.50. On the downside lighten at triple bottom breakout at $19.50 and close all long positions at penetration of the main support line with possible return to the intermediate low at $12.50.
Fabio Verdelli (CMT) is equity technical analyst at MV Portfolio Advisors. He has analyzed commodities and financial markets using technical analysis since 1998 and implemented technical analysis to develop trade ideas and assess risk. He is an expert on Point & Figure charting method and is currently publishing analysis on “Trend-online” financial website and Yahoo Finance Italy.Verdelli is a member of the Market Technician Association (MTA) and a member of the nominating committee within the MTA
MV Portfolio Advisors offers capital investment and risk management consulting. The firm provides equity research reports based on technical analysis featuring investment opportunities arising in the marketplace to help portfolio managers making timely trades.