Though one share of Apple still not as valuable as one ounce of Gold, Apple with its products and its value in terms of market cap has been widely followed and discussed over the past five years. Every day I go through hundreds of charts and analyze different asset classes and I come across great opportunities that I share with you here on this platform. In this post I’d like to show a remarkable similarity between two strong uptrends. These uptrends drew investors attention and they have been widely discussed and followed in the financial media in the past few years. But before I analyze these two charts I would like to give a short definition of a parabolic move.

Parabolic trend is an exponential curve. The shape of the curve is parabolic and it reflects the acceleration in price activity. The curve (price) starts off almost as a horizontal line. The slope of the curve (price) increases exponentially as price action moves higher. The parabolic curve eventually develops to a point where the last points on the curve create a vertical line. The curve is then completed and so is the trend that it defines. Parabolic trends are momentum driven and when the trend ends, the sell-off is often dramatic and substantial.

Gold, in the second half of 2011 had a parabolic move. This was part of the continuing long-term uptrend that took off from $1,570 levels and reached $1,909 levels in less than two months. Interestingly, price reached the upper boundary of the long-term trend channel at $1,900 levels and entered into a multi month correction which started with a sharp sell-off.

Similarities between the uptrends on APPLE and GOLD  caught my attention while I was analyzing the technology stocks in U.S. During the uptrend APPLE respected the long-term moving average and found support at each correction. It also trended higher in a clear trend channel. The exciting part of this uptrend is the last run off from $400 levels to $526 levels in less than two months. The parabolic move reached the upper boundary of the long-term trend channel. Price behavior, technical indicators and the duration of the trends are similar for APPLE stock price and GOLD.

Is this an intermediate term peak for APPLE and can the stock price enter into multi month correction? Can the correction start with a sharp sell-off?

 

Thanks everyone for participating in the poll on what to read at Tech Charts. The feedback has been valuable. As there are plenty of opportunities in the financial markets it is important to filter them and present the widely followed instruments on a daily basis. Though this post is not one of them, many of my friends who are investing in Turkish equities and are following this currency on a day to day basis kindly asked me to post an update on this specific topic.

It is a timely request as USD/TL has been one of my favorite breakout and pullback pattern for the past one year. As you can see from the long term chart, USD/TL broke out of a decade long cosnolidation range in 2011 at 1.76 levels and quickly reached 1.91 levels. Since then the crossrate experienced a nice pullback to that long-term consolidation range. What makes 1.76 levels strong is the overlap of the horizontal support and the 200 day moving average at the same level.

We can see last 4 month’s flat consolidation range much better on the daily scale. With USD/TL reaching 1.74-1.76 area it is now time to expect a rebound from these levels towards 1.80-1.85 area. Three major support levels are holding the crossrate from moving lower. RSI is oversold and is signaling a rebound on the crossrate. US dollar should gain strength against Turkish Lira.

Since August 2011 I’m updating U.S. Unemployment Rate with the above template. I looked at the % change on the unemployment rate from a different perspective and applied 1 & 2 year moving averages to see crossover signals and the length of trends after major crossover signals.

(http://techcharts.wordpress.com/category/economics-united-states/)

In this analysis I concluded that in the worst case  unemployment rate can continue lower for another year until 2012. Because in the past the shortest trend last for a year after a moving average crossover signal. Unemployment rate continues to move lower in United States with 8.3% by the end of January. We can expect better figures in the first half of 2012.

In the previous update I discussed the strength in the energy sector and analyzed Brent Crude Oil. Price of Brent Crude is breaking out of a long-term symmetrical triangle. 3 year-long uptrend resumes in the parallel trend channel and  price is clearly above the 200 day moving average.

In this update I’m looking at other energy commodities to see similar patterns. Heating Oil, due to its high correlation with Brent Crude and Light Crude followed the same pattern, a 3 year-long uptrend that found support at the lower boundary of its trend channel and price held above the 200 day moving average. Though Brent Crude formed a symmetrical triangle over the past one year, Heating Oil traded in  flat range and formed a rectangle.

3.20 level is strong resistance for Heating Oil and if price breaches above this level we will expect further strength towards 4.00 levels.

When analyzing long-term charts, 200 day moving average is extremely helpful in deciding the direction of the long-term trends. Supported by the 200 day moving average, 14 period RSI on the weekly scale is a good confirmation of that trend. In the previous posts you’ve come across the term “road map” referring to the 200 day moving average. Price can move sideways and violate the 200 day moving average several times during a corrective period. These are the difficult times in decision-making. Likewise RSI would violate 50 levels. During these indecisive periods price forms a chart pattern that becomes clear once the pattern is close to completion. Breakout from a chart pattern confirms the direction of the long-term trend. AUD/USD is a good example.

Currency pair fell below its 200 day moving average in the first half of 2010 and in the last quarter of 2011. These periods ended up being minor corrections with price recovering above the long-term average and RSI above 50 levels. In the last two weeks we have seen AUD/USD breaking out of its sideways consolidation range at 1.047 levels. RSI moved above 50 levels and price moved higher confirming its uptrend above its 200 day moving average.

Upward trend channel is still intact and AUD/USD resumes its long-term uptrend. Our road map tells us to stay on the long side of this chart with  intermediate/long-term stop-loss levels between 1.027 (200 day moving average) and 0.976 (lower boundary of the trend channel)