Apple’s Chart Flags 1st Sell Since ‘08: Technical Analysis

Apple Inc. (AAPL) stock sent its first sell signal since September 2008 based on a Japanese charting technique, suggesting the maker of the iPhone, iPad and iMac may slide 5.1 percent more, according to Dahlman Rose & Co.

Shares of the Cupertino, California-based company fell below the lower cloud support on the daily ichimoku chart on May 13, with the lagging line undercutting its cloud. That suggested the stock may continue its decline and approach its average price during the past 200 days, said Rick Bensignor, chief market strategist at Dahlman Rose. Apple closed at $333.30 yesterday, with its 200-day average sitting at $316.30.

“The structure of its chart has shifted away from the bullish picture that has been in place for the past two years,” Bensignor said in an e-mail. “At the very least, it tells me ‘I don’t want to be buying Apple right now.’”

Apple dropped 8.2 percent through yesterday from a record $363.13 on Feb. 16 as Sony Corp. introduced its first tablet computer and Samsung Electronics Co.’s Galaxy Tab had its second price cut this year in April. The stock fell 0.6 percent to $331.34 as of 11:15 a.m. New York time, headed for the fifth consecutive decline, its longest losing streak since April 6.

Ichimoku charts use the midpoints of historic highs and lows to analyze a security or index. Clouds, or areas between two of the lines on the chart, are used to show levels where buy orders may be clustered.

The last time both Apple’s stock price and its lagging line broke below their clouds, on Sept. 5, 2008, the shares plunged 51 percent before they bottomed on Jan. 20, 2009, according to data from Dahlman Rose and Bloomberg. So far this year, Apple has risen 3.3 percent, trailing the 5.7 percent increase in the Standard & Poor’s 500 Index. The stock rallied 53 percent last year and 147 percent in 2009, beating the benchmark’s gains of 13 percent and 23 percent, respectively.

Technical analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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