Chart Advisor: Apple Falls Short

Articles From: Investopedia
Website: Investopedia

By J.C. Parets & All Star Charts

1/ Apple Falls Short

2/ Demand for International Stocks Hits Supply

3/ The Downtrend Persists for Bonds

4/ The Canadian Dollar Can’t Catch a Break

Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.

1/ Apple Falls Short

Apple (AAPL) released its quarterly earnings report, and shares of the tech giant fell more than 4% in today’s session, dragging the market lower.

We’re dealing with a big basing pattern that resolved higher in June, but price is pulling back to former resistance at approximately $183.

While momentum remains in a bullish regime, the 14-period relative strength index (RSI) has been making lower highs with each subsequent price high. Not only is there a massive bearish divergence in place, but momentum is falling off a cliff as of late.

This begs the question of whether this is a simple retest of former highs, where buyers could step in and support price. Or do we have a potential failed breakout brewing, and prices are on the verge of reversing hard to the downside?

If it’s the former and price catches a bid at this level, the market will likely benefit. On the flip side, stocks at the index level could struggle if Apple slides back into its prior range.

2/ Demand for International Stocks Hits Supply

While major U.S. indexes and sectors are running into overhead supply, global equities are too.

Our equal-weight custom index of the most significant international stocks listed on U.S. exchanges illustrates this theme:

As you can see, price is challenging a critical level of resistance that coincides with its former highs of last year and 2021.

Momentum waned as the index made new highs last month, resulting in a potential bearish divergence as price challenges a critical level of interest.

We could see some sideways action as price absorbs overhead supply. However, a breakout could signal a fresh leg higher for equities overseas.

3/ The Downtrend Persists for Bonds

If rates are on the rise—which they are—it means only one thing for bonds.

Lower.

Check out the long-duration U.S. Treasury Bond ETF (TLT) breaking down from a nine-month consolidation:

TLT printing fresh year-to-date lows does not present a bullish development for the bond market. 

In fact, it’s quite the opposite.

The last nine months formed a bearish continuation pattern, now resolving lower. More downside action for the bond market seems a higher-probability outcome heading into the end of the year.

4/ The Canadian Dollar Can’t Catch a Break

Major global currencies continue to contend with a strong dollar.

Even commodity-centric currencies such as the Australian and New Zealand dollars turned lower this week despite renewed strength among raw materials.

Canadian dollar futures provide another excellent example:

The Canadian dollar can’t seem to catch a break as it remains stuck below a multi-year downtrend line. The bearish momentum regime on the 14-day RSI doesn’t help the bulls’ case either.

The Canadian dollar and commodity-centric currencies in general could regain lost ground against the U.S. dollar in an environment where crude oil and other commodities resume a leadership role.

For now, Ol’ King Dollar is behind the wheel.

Originally posted 4th August 2023

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