Apple Melts Up Into Blue Skies: Is The Stock Headed For $200?

Apple, Inc AAPL was trading up 3.5% and made a new all-time high on Tuesday as it led the S&P 500 up 2% higher by mid-day. Apple has been the strongest of the tech giants recently, making a series of new all-time highs over the past 13 trading days despite the general markets experiencing a 5% pull back over the past 11 trading days.

On Monday, Morgan Stanley analyst Katy Huberty maintained an Overweight rating on Apple and raised its price target from $164 to $200. A number of options traders believe Apple may hit the price over the coming months and purchased a number of orders with strike price of $200 and $210 and a March expiry.

On Nov. 8, Benzinga called out Apple may be set for a blue-sky run when the stock was trading over 10% lower near the $153 level. Apple has room to move up higher still, however, it will need to eventually consolidate.

The Apple Chart: Apple made a new all-time high of $171.58 on Tuesday, which confirmed the uptrend is intact. The stock’s most recent higher high was printed on Dec. 1 at $170.30 and the most recent higher low was created at the $157.80 mark on Dec. 2. Apple will eventually need to print another higher low above the level, which will help to consolidate the bullish move.

The consolidation is needed because Apple’s relative strength index is registering hot at about the 72% level. When a stock’s RSI nears or exceeds 70% it becomes overbought, which can be a sell signal for technical traders.

If Apple closes the trading session near its high-of-day price it will print a bullish kicker candlestick pattern, which may indicate higher prices will come on Wednesday. This is a lagging indicator, however, because Wednesday’s candle will be needed to confirm the pattern.

Apple is trading above the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending above the 21-day, both of which are bullish indicators. The stock has become heavily extended from the eight-day EMA, which has been guiding Apple higher since Oct. 14 and traders can expect Apple will need to consolidate with a higher low or trade sideways for a period of time to allow the eight-day to catch up.

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Bulls want to see eventual consolidation and then for big bullish volume to come in and break Apple up to form another new all-time high. There is no resistance above in the form of price history outside of Tuesday’s high-of-day.

Bears want to see big bearish volume come in and drop Apple down below its previous all-time high, which would cause the stock to fall below the eight-day EMA. The stock has support below the levels at $162.14 and $157.26.