Chart of the Day – $AAPL vs. $JCP on Talking Numbers on CNBC

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Here’s a preview of what I’ll be discussing on Talking Numbers today around 3:20 to 3:30 pm EST on CNBC:

With AAPL on the tip of everyone’s tongue, I’m going to revisit the AAPL chart today.  I laid out last month why I thought AAPL had made a long-term top, but today I want to detail why we might be close to a short-term bounce.

First, the weekly chart of AAPL since the start of the bull market:

 

 

I’ve drawn the trend channel that AAPL respected so well from 2009 to the start of 2012.  It was a healthy uptrend that exhibited no signs of euphoria.  However, the stock started to go parabolic in February, and broke outside of the trend channel, a much more unhealthy form of appreciation on a long-term basis.  The stock has spent the last 9 months outside of the trend channel (circled in red), but its recent selloff has finally brought it close to that long-term trend.  I think AAPL’s selloff is close to done, and risk/reward of buying the stock here is much better than it has been in the past 9 months, but I view one last move lower back into the trend channel as a distinct possibility.

Contrast AAPL’s bull market chart with JCP during the same time period:

 

 

I’ve drawn the red line at the important 19-20 support level, where it bounced from this morning.  This is a 40% short interest name with a lot of bad news priced in, so I think it could bounce as well.

However, I’m more confident that AAPL is close to a bounce because of its longer-term strength.  But you might get one final washout before this selloff is over.