Charting Apple & Gold Technicals

<p>What to make of Apple’s 31% decline over the last five months against equity indices resilience near five-year highs? And will gold remain supported by […]</p>

What to make of Apple’s 31% decline over the last five months against equity indices resilience near five-year highs? And will gold remain supported by the mercy of central bankers?

Markets’ expectations of further asset purchases by the leading central bank have transformed into a three-consecutive weekly rally in gold—not seen since September. Gold’s overall showing against the 11 currencies has fared weaker than any of the prior five years. It ended 2012 higher against all major currencies

As we said in our Dec 5 piece on gold, the yellow metal may never run out of fundamental factors for maintaining support. Technically, the 100-week moving average continues to provide remarkably support –from 1527 in May to 1626 in January. The more challenging part is capturing (and timing) the upside. Considering the three-month trendline resistance near $1700, we find the improving stochastics to carry sufficient momentum in breaking above the trendline and extending gains towards 1750s, before a possible retest of 1780s.

Apple’s fundamental woes have been underlined by a flood of new product launches, which failed to keep the aggressive rates of the early releases of iPad & iPhone. The worst of both worlds emerged when concerns about insufficient supply of iPhone 5 and iPad mini overlapped with reports of slowing demand. Wednesday’s earnings release is expected to show $13.34 per share from the prior $13.87/share, which would be an unusual y/y decline.

Apple’s technical picture begins to show similarities with gold in its 100-week moving average as well as its own four-year trendline support. Yet, the dynamics begin to change when we widen the oscillators beyond the weekly horizon and find escalating risk of a break below the 100-WMA. A confirmed close (weekly) below 470, raises the risk for further pullback towards 400s until technical traders chase up the 200-week moving average, which was last touched in March 2009. The ability to hold above 470 for at least three weeks is likely to draw in the bulls for a required recovery beyond 540 – a confluence of trendline resistance and previous support.

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