A Bullish Divergence in AAPL?

Frequent e-mailer and one of my most loyal readers, Hal B., asked about a bullish divergence setup in AAPL. I don’t have annotation capabilities from my current locale, so bear with me as I explain the chart.

I do see a slight divergence that might be used for an extremely short term play. We measure the divergence by taking a look at the two february lows, both of which printed long tail candles. If you measure both RSI and Stochastic readings at those levels, you will see a “higher low” readings. This creates a bullish divergence.

While the divergence could be used for a short term play, the overall trend in both price and volume is still down. OBV stinks. Volume is not diverging with RSI and Stochastics. Today’s nice up move was not on “bottoming” type volume.

Thus, until AAPL mounts a major resistance level and has an uptick in upside volume, I’ll stay out of the divergence trade.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

%d bloggers like this: