Apple (NasdaqGS: AAPL) shares and a key Nasdaq exchange traded fund have been stuck in consolidation patterns lately, but that could just be a pause for breath before the next move higher, some technical analysts say.
“Innovator Apple is probably one of the most talked about members of the Nasdaq-100,” said Tarquin Coe, technical analyst at Investors Intelligence. “Its leadership has tailed off recently as the chart takes a necessary breather, evident from the sideways consolidation since the start of the year.”
Apple traded lower Friday but PowerShares QQQ (NasdaqGM: QQQ) was on track for a gain for the week.
“The sideways range [in Apple]has allowed the 200-day exponential moving average to catch up with trading,” he added. “With the exception of a fleeting visit with the flash crash of a year ago, the last flirt with that average was in April 2009, as markets were pulling out of the bear market lows.”
Coe said his bullish read on the Apple chart bodes well for the rest of the market.
Meanwhile, PowerShares QQQ has encountered resistance in recent weeks at the so-called 38.2% Fibonacci retracement line of the tech collapse from 2000 to 2002.
“The six month chart shows that level clearly presenting resistance and even as recently as yesterday the ETF was rebuffed by its existence,” the analyst wrote in a note to subscribers Friday.
The 38.2% retracement line for PowerShares QQQ stands at $58.24 a share.
A close above this level and follow-through “will open the gates to a strong rally,” Coe said. “Beyond the 38.2% retracement, the next target level for the QQQ is $70.13, a 50% retracement of the dot-com bubble collapse.”
