Apple has bounced back pretty dramatically from its lows over the summer, and Jim Cramer says his long-term view is that it's a stock to own, not trade. A closer look at Apple's charts, the "Mad Money" host says, offers shareholders a glimpse into how long and how bad the tech giant's decline could last.
Carolyn Boroden, the technician who runs the FibonnacciQueen.com website, called the rebound in Apple by tracking the stock and using symmetry. For example, Apple's decline going into May of this year, when it bottomed, lasted for a little more than $45. The last big downturn before that was in April 2013, which lasted $45.71. She says many stock swings tend to be similar (or symmetrical) to previous swings in the same name.
But her methodology can also be applied to time. That way, she can measure how long the declines lasted and estimate when a stock is most likely to change its direction.
However, when looking at a stock that's in an uptrend, her typical upside target is a bit lower than that. She expects Apple to make a 127.2 percent extension of its previous swing, resulting in her long-term price target of $146.
Back in September, when Cramer spoke with her, she said the stock would have to clear some short-term hurdles. The first was from $110 to $112 per share. The last two rallies before this one went on for about $30 each.
Now considering that the stock's rally from its May lows to last week's high was a little more than $29, Boroden warned the "Mad Money" host that Apple's move higher could be somewhat rocky. Now there's a tough ceiling of resistance between $118 and $121.
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At the moment, Apple is going lower, not higher so what should shareholders do while the stock is pulling back? Based on the daily chart, Apple is sitting right on top of the Fibonacci "floor" of $111. Boroden remains bullish on Apple as long as the stock holds above its lows from September 12, at $102.53. Below that level, the chart pattern turns negative and all bets are off.
Boroden told Cramer that above $102, and above the floors of support from $108 to $111, she thinks this could be a good moment to be stocking up on Apple, because as long as the floor holds, the stock should only have three more points of downside at most.
The bottom line, Cramer said, is that the charts, as interpreted by Carolyn Boroden, suggest that the recent pain in Apple will probably come to an end soon. That doesn't mean the stock is ready to turn into a rocket and soar higher, but she expects that Apple will be testing its resistance again at the $118 to $121 level in the not too distant future.
Now, regular viewers know that Cramer believes they should own Apple, not trade it. He said he likes the fundamentals of the Apple charts, including the company's most recent quarter, but, he said, it's good to know that the charts are probably on the bulls' side.
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