With Apple (AAPL) closing comfortably near the center of its short term range it’s time again to take a look at the stock from a sentiment perspective. Twitter sentiment for AAPL on a daily basis is starting to strengthen by posting slightly better highs and mostly higher lows. However, the highs are not reaching the levels attained on previous rallies in the current down trend. This suggests that traders have been stung by buying previous rallies and as a result aren’t showing as much optimism for the current bounce.
Smoothed sentiment for AAPL is making a slightly higher high and is above zero, but is still well below the confirming down trend line. The volume and intensity of tweets for AAPL continue to increase as the stock moves lower and decrease on rallies. This is another sign that even though market participants are slightly bullish they are also a bit wary.
Twitter support and resistance levels for AAPL offer some encouragement. Other than the obvious support level at 420, the vast majority of tweets call for prices above current levels. There has been a surge of tweets projecting 500 as a likely target for a rally and another cluster of tweets calling for 450 to 465.
Below APPL’s current prices, 420 is still a very important line in the sand. It represents a support level first called for in November of 2012. Each sell off in the stock has brought more calls for that level. Traders have not projected further downside in the stock until just recently. In fact, it wasn’t until the stock hit 420 that we started seeing a lot of tweets below that level. The small rally over the past few weeks has seen the projections of 400 and 380 mostly dry up. This show that most traders are looking up rather than down.
When we put it all together we think that people are giving AAPL the benefit of the doubt, but are wary. If AAPL can push higher and clear first the 440 level and then the descending trend line and 50 day moving average near 460 we suspect that buyers will pile on and push the stock to the 500 level that we see in so many tweets. A break of 420 will most likely signal a resumption of the down trend and could bring swift selling due to the lack of serious support below that level. So watch the range and how sentiment reacts to any break. We want to see confirmation from traders on Twitter on any move above the 440 level to become more constructive on the stock.