Five Star Stock Watch: Apple, Inc.

Last night Apple released their earnings report last night and apparently Wall Street is not impressed with the company's forward guidance. Shares were down 8 percent in after-hours trading.

Apple is sure to start the morning in the basement, but at what point should investors expect the stock to hold ground? Or the selling to accelarate lower?

The company: Apple, Inc.

Ticker Symbol: (NASDAQ: AAPL [FREE Stock Trend Analysis])

Sector: Consumer Goods   

Industry: Electronic Equipment

Apple Inc. and its wholly-owned subsidiaries design, manufacture, and market mobile communication and media devices, personal computers, and portable digital music players worldwide. It also sells software, services, peripherals, networking solutions, and third-party digital content and applications related to its products.

Please take a look at the 20-month chart of AAPL (Apple, Inc.) below with my added notations:

In a recent Five Star Stock Watch article I highlighted a rising wedge pattern on Apple. The stock broke out of the bottom of that pattern, and now it appears Apple's earnings will be the catalyst for a lower move.

You will notice on the chart I have added a 200-day moving average (MA), which can commonly act as support and resistance for a stock. Apple's drop, and any further selling therafter, needs to hold the 200-day MA or increased selling will most likely occur.

Apple isn't set to release earnings again until April, 2014.

No matter what your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!