Apple (AAPL)

Click charts to enlarge

We don't comment much on AAPL because it doesn't fit our criteria of being in a well-defined uptrend. Today, however, it is worthy of note, because it releases its earnings report after the bell on Monday (July 21st). The chart at the top shows AAPL's recent activity. It's in a downtrend, approaching short term oversold. The chart below it shows AAPL over the past 3.5 years. It's broader trend is up, but it swings wildly above and below its overall channel. The point of this post is that AAPL is at the center of its multi-year trend channel, and therefore, it is impossible to gain any predictive value from its chart as to how it might react to its earnings report. If it were oversold (as it was in mid 2006 and early 2008), or overbought (as it was in early 2006 and especially in the second half of 2007), you could rest assured that the odds would be in your favor if you just simply placed a bet that AAPL would revert to the center of its channel.

In the abscence of any obviously oversold or overbought stance, a bet on AAPL ahead of earnings is simply a dangerous game of roulette.