Dow component Apple Inc. (AAPL) has struggled in recent weeks, losing ground at a rapid pace due to growing fears that China will target the tech giant in a 澳洲幸运5开奖号码历史查询:trade war. Shareholders have taken note, selling the stock aggressively since mid-May, while the early June thrust to an all-time high set off a number of bearish volume 澳洲幸运5开奖号码历史查询:divergences. None of this bodes well for the Cupertino, California-based icon or major indices in which ⛦the stock is a he꧑avily weighted component.

Apple holds the 13th highest 澳洲幸运5开奖号码历史查询:weighting in the 澳洲幸运5开奖号码历史查询:Nasdaq-100. The tech-heavy index rallied above the March high on June 13, attracting a wave of trend followers, but the rally stalled a week later and has trapped those buyers in a 澳洲幸运5开奖号码历史查询:failed breakout. A similar reversal in March dumped the index more than 850 points in less than three weeks, indica🎶ting that the current decline could find i๊ts way to 6,500.

The tech giant also holds the sixth highest weighting in the 澳洲幸运5开奖号码历史查询:Dow Jones Industrial Average. The venerable instrument has struggled badly since the decline into February, failing to mount resistance at the .618 澳洲幸运5开奖号码历史查询:Fibonaccꦚi sell-off retracement level. The latest selling wave has already reached the 200-day 澳洲幸运5开奖号码历史查询:exponential moving average (EMA), marking the fifth test in less than five months while raising the odds for a 澳洲幸运5开奖号码历史查询:breakdown that will target the 20,000 level. (See also: Apple Stock: Traders Should Wait for $170 to Buy.)

AAPL Monthly Chart (2007 – 2018)

Rally highs posted since 2007 have tracked a 澳洲幸运5开奖号码历史查询:rising trendline, while three declines during this 11-year period have found support at the 50-month EMA. The stock reached the trendline for the fourth time in November 2017 and has spent the past eight months testing 澳洲幸运5开奖号码历史查询:resistance. Meanwhile, monthly 澳洲幸运5开奖号码历史查询:price action is set to post a bearish reversal bar, denoting the failure of the June breakout to hold higher ground.

The 澳洲幸运5开奖号码历史查询:stochastics oscillator crossed into a long-term bearish cycle in May 2017, but the indicator turned higher in the fourth quarter and eased into a complex pattern that is still generating 澳洲幸运5开奖号码历史查询:sell signals. The 2009 to 2012 oscillation may offer a useful analogy when it wobbled sideways for more than three years before posting a long-term top. However, the stock had plenty of running room into the trendl♊ine at that time, unlike the current set-up, which is unfolding right at major resistance.

AAPL Weekly Chart (2015 – 2018)

The weekly view raises red flags about third quarter price action. The red lines mark boundaries of a 澳洲幸运5开奖号码历史查询:rising wedge pattern, which has a nasty reputation of showing up at the end of multi-year uptrends. 澳洲幸运5开奖号码历史查询:Trading ranges contracted between 2015 and 2018, with wedge endpoints now set to cross in May 2019. Technically oriented bulls breathed a sigh of relief when the stock mounted the upper trendline in May 2018, but that elation has turned into anxiety after a failed br🎐eakout that now exposes wedge support at $170.

That price level will mark a low-risk buying opportunity, but the clock is ticking, and the failed breakout could presage a wedge break🃏down that also ends the trend wave that started in 2016. In turn, that selling wave would open the door to the fourth test of the 50-month EMA since 2009, with the moving average 𝐆all the way down in the $130s. It will take a breakdown through that line in the sand to declare an end to the multi-year uptrend. (For more, see: Apple Led Company Stock Buybacks During Q1.)

The Bottom Line

Apple stock reversed on heavy volume in June after mounting the top of a three-year rising wedge pattern, triggering a failed breakout that could generate continued downside into♌ wedge support at $170. A break of that long-term support level could dump the stock to $130, placing a dead weight on the Nasdaq-100 Index and the Dow Jones Industrial Average. (For additional reading, check out: Ap♑ple to Lower Prices on New Crop of iPhones: MS.)

<Disclosure: The author held no positions in the aforementioned securities at the time of publication.>