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Apple In Established Long-Term Downward Trend

03/05/13 02:02:56 PM
by Alan R. Northam

Statistical analysis shows Apple established in a long-term downward trend.

Security:   AAPL
Position:   N/A

Figure 1 shows the daily price bars of Apple (AAPL) in the bottom window. The top window shows the linear regression slope indicator and the middle window the R-squared indicator.

FIGURE 1: AAPL, DAILY. This chart shows the daily price chart of Apple, stock symbol AAPL, in the lower window along with its 200-day linear regression trend line and its associate channel lines. The top window shows the Linear Regression Slope indicator followed by the R-Squared indicator in the next lower window.
Graphic provided by: MetaStock.
Note that the linear regression slope indicator in the top window has crossed below its zero line to indicate a reversal in trend from a long-term upward trend to a long-term downward trend.

The R-squared indicator in the middle window shows it has crossed above the critical level to indicate a statistically significant upward trend. A statistically significant trend is one that has a 95% statistical confidence level of continuing.

The bottom window shows the daily price bars of AAPL. This window also shows the 200-day linear regression trend line (blue line) along with the upper 1 sigma channel line (red dotted line), the upper 2 sigma channel line (solid red line), the lower 1 sigma channel (green dotted line), the lower 2 sigma channel line (solid green line), and the lower 3 sigma channel line (dashed green line). The red channel lines represent resistance lines and the green channel lines represent support.

In the bottom window notice that price broke down below the -3 sigma channel line. This signals that a reversal in the long-term trend from up to down was in progress. The reversal was complete once the linear regression slope indicator moved below its zero line and the R-squared indicator moved above its critical level in late January 2013. Thus, Figure 1 shows that AAPL has reversed its long-term upward trend and is now established in a long-term downward trend. Notice that both the linear regression slope indicator and the R-squared indicator continue to point in the downward direction indicating that the downward trend has further to go.

Alan R. Northam

Alan Northam lives in the Dallas, Texas area and as an electronic engineer gave him an analytical mind from which he has developed a thorough knowledge of stock market technical analysis. His abilities to analyze the future direction of the stock market has allowed him to successfully trade of his own portfolio over the last 30 years. Mr. Northam is now retired and trading the stock market full time. You can reach him at or by visiting his website at You can also follow him on Twitter @TradersClassrm.

Garland, Tx
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