Figure 1: Daily chart of AAPL.
On the daily chart, AAPL has been working its way higher within a rising price channel since December 2003. While the Nasdaq declined sharply in July and August, Apple gapped higher in mid-July and held firm throughout Nasdaq's weakness.
|The resulting pattern was a symmetrical triangle (magenta trendlines) and the recent breakout signals another continuation higher. Notice that volume was above average on the breakout and this further validates strength. This is especially impressive considering that overall volume levels for the Nasdaq have been below average in August. |
With a fresh breakout, it is time to consider upside targets and there are three options. First, the symmetrical triangle projects further strength to around 38 - 39. The width of the pattern (about 6) is added to the breakout (32.3) for a target. Second, the upper trendline of the rising price channel extends above 40 in September. Should the stock continue the prior rate of ascent, a move to the upper trendline can be expected.
|Figure 2: Weekly chart of AAPL.|
|Graphic provided by: MetaStock.|
|Turning to the weekly chart, we can see an even larger price channel and higher target further on the horizon. This price channel extends back to April 2003 and the upper trendline projects a move to around 50 by the end of November (green circle). Perhaps Christmas is coming early for the maker of the iPod.|
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