So far Apple has now bounced just about $3.50 off of its lows set in yesterday’s sessions. Apple was fairly oversold on the hourly chart for a relatively prolonged period of time and did reach a 30-RSI on the daily. Apple also filled the gap yesterday. Now one thing worth pointing out is that whenever Apple hits a 30-RSI on the daily chart (as seen above) during a bull market, it is far more likely to bottom within 1-day of hitting a 30-RSI than in other periods. I know that the statistics demonstrate that Apple will bottom out within 1-session of hitting a 30-RSI on 50% of the occasions. In the 20 instances that Apple hit a 30-RSI, it bottomed on the very day it hit 30-RSI in 10 out of those 20 occasions. However, what one will find is that all 10 of those instances happened during bull markets where Apple was in an uptrend. For example, the last time Apple hit a 30-RSI was in June when the stock fell to $142 a share. Apple bottomed out that very day. The table below is updated. It shows the last 20 times Apple hit oversold territory going back to March 2006:
Between 2005 and January 1, 2008, Apple was on a pretty explosive bull market rally. During that Apple bull market, the stock became oversold twice. Once in March 2006 and again in July 2006. In both instances, Apple bottomed out within 1-day of reaching a 30-RSI.
After Apple bottomed in March 2009 at the lows of the financial crisis, the stock entered into a new bull run that lasted from March 2009 until September 2012 when it underwent a 45% crash. During that three year bull period, Apple became oversold three times. You can see it in the chart above in the light blue shading. Once in August 2010, once July 2011 and again in May 2012 after the parabolic rally. In each instance, Apple bottomed within 1-day of hitting a 30-RSI. That means in 5 out of 5 cases Apple bottomed the day it hit a 30-RSI in both the 2005-2008 bull market and in the 2009-2012 bull market. After Apple bottomed out in June 2013, it went on a 2-year bull market run from July 2013 until July 2015. Remember, Apple bottomed out at around $388 a share in late June or early July 2013. It then skyrocketed into a 2-year bull market run where the stock peaked at $133 a share in July 2015. During that 2-year bull market run, Apple hit a 30-RSi twice. In both instances, Apple bottomed out within 1-day of hitting a 30-RSI.
Apple then entered this current bull market on June 27, 2016 when it bottomed the day it hit a 30-RSi at $91.01 a share on Brexit nonsense. Since this bull market started, Apple has hit a 30-RSI on three previous occasions. This is the fourth occasions. In the prior three, Apple bottomed within 1-day of hitting a 30-RSI in 2 our of the 3 occasions.
So as you can see, in 9 out of the 10 total cases where Apple bottomed within 1-day of hitting a 30-RSI, they all came during bull markets. What this indicates is that while generally speaking, it is true that Apple bottoms within 1-day of hitting a 30-RSI in 50% of the cases, in bull markets that statistic is closer to 90% of the time. In fact, there is only one case where Apple has spent more than a single day under a 30-RSI during a bull market and that was this past November where Apple spent 7-days trading lower after hitting a 30-RSI on November 4, 2016. Apple lost an additional 3.7% before bottoming out and then rallying 15.78% over the next 43-sessions. The total rally from a 30-RSI was 11.49%.
This is important because if Apple is still technically in a bull market, chances are it bottomed out yesterday. It’s a different slant to this 30-RSI analysis. We cannot afford to just simply ignore this fact. But what this also tells us is that when Apple is in a bear market situation, it takes longer than just 1-day to bottom out. Yet, at the same time, there are only 6 total cases out of 20 cases where Apple spent more than 7-days in a continued downtrend after reaching a 30-RSI. And there are only 3 cases where Apple spent more than 2-weeks doing so. In most cases, when Apple hits a 30-RSI, you can expect a rally within 1-2 weeks.
