Apple’s most recent earnings report was mixed — not stellar, as the bulls were expecting.

Apple on May 2 reported fiscal second-quarter earnings, and revenue and iPhone unit sales were lower than analysts had expected.

That has raised concern among experienced investors. Some may recall that I issued a “sell” signal on Apple AAPL,   stock hours before it peaked five years ago. In the ensuing seven months, the shares halved. (Verify my call by clicking here. Please note that the stock has been spilt 7-for-1 since then.)

Can Apple’s stock price be cut in half again, as it was five years ago? That is the question I am being asked now.

Before I discuss that topic, let’s look at a long-term monthly chart of Apple. You’ll see:

• Fibonacci extensions are useful for estimating resistance levels when a stock is at a new high. The chart shows that Apple crossed over the 138.2% Fibonacci extension from the last retracement but did not cross the 150% extension. Strong stocks often pull back from these Fibonacci extensions.

• Those who are uninitiated might call Fibonacci voodoo. Before doing so, note from the chart that the last retracement in Apple’s stock stopped at the 50% Fibonacci retracement level and then bounced over 50%.

• Apple’s stock has jumped over 50% from the last major low. Historically, it is common for stocks to rise more than 50%, take out “stops” of short sellers, hit targets of long investors, turn non-believers into believers, and make a further move to about 60% from the last major low. As of this writing, Apple’s stock is in the proximity of that 60% point.

• After about a 60% move, there is usually a retracement.

• The chart shows that the relative strength index (RSI), a momentum indicator, is in overbought territory. A number over 70 is considered overbought…Read more at MarketWatch

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