Apple (NASDAQ: AAPL) is a company and stock everybody knows and follows, and it carries a 1.9% weighting in the S&P 500, which is precisely why it is worth watching closely.
Case in point, Tuesday’s announcement that Steve Jobs will hold the keynote address at next week�s Worldwide Developers Conference was all over the news and gave the stock a nice pop, although it fell with the rest of the market on Wednesday.
On a two-year weekly chart we see a clear uptrend channel that is very much still in place as AAPL currently trades smack in the middle of the channel.
Zooming in closer on a daily chart, the downtrend resistance becomes apparent. After putting in an all-time high on Feb. 16, Apple has had a fairly volatile sideways consolidation period, and more importantly, one that looks to resolve itself soon in either direction.
This downtrend line currently comes in just around $350 and gives us a clear risk/reward setup. The setup would trigger on a solid daily close above the $350 level. A final profit target on the long side would be near the highs of February, and a clearly defined stop-loss could be placed just a smidge below the 50-day moving average (yellow line).
The potential trade setup (if and when triggered) is interesting in and of itself. However, I am just as interested in closely monitoring how AAPL trades as a proxy for the broader tape.
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