A Death Cross In Apple Stock AAPL Means Long Term Downtrend

A death cross forms when the 50 SMA falls below the 200 SMA. When a death cross forms it means a sharp downward move for the stock. What happened to the Apple Stock AAPL. It had been doing very well. Then suddenly it fell and now the price has fallen below $120 per share level.

The price dive began after the company’s third quarter earnings report showed iPhone sales of 47.5 million, missing analysts’ expectations for 48.8 million. While that might seem like a minor miss for a business sitting on more than $200 billion in cash, it shows just how high hopes have gotten for what’s already the world’s most valuable company.

So you can well imagine how much fickle the market can be. A slight miss in the quarterly earnings has started the downward spiral and a death cross seems to be forming meaning for the first time 50 SMA will drop below the long term 200 SMA. This death cross means the short term downtrend in the stock price is not short term but long term.

Adam Sarhan, CEO of financial advisory firm Sarhan Capital, said he turned bearish on Apple’s stock earlier this month, after being bullish for about 1 1/2 years, because it broke below key support, including the 200-day moving average.

“When you see a major break in a stock like Apple, that means the big institutions are selling, not buying the stock,” Sarhan said in a phone interview with MarketWatch. “We saw this in 2012.”