AAPL continues to move lower following Friday's downside "breakout" and is currently finding support at the top of a small "three-weeks-tight" flag it formed in January of 2012. This doesn't strike us as a reliable area of support given its short duration. The flag, however, sits on top of a prior base it formed in late 2011. Support below the 422-423 level is around 409-410, but our longer-term downside target remains 360, roughly around the lows of the base it formed in late 2011. Look for AAPL to approach the 410 level before attempting a more concerted bounce, although in any case we would use the 430 level, at the very least, as our maximum upside trailing stop.
ALXN is rallying up towards the 90 resistance level, and as we see it the closer it gets to 90 on any rally the lower the risk proposition of shorting the stock is given that the 90 resistance level also serves as our guide for an upside stop. Thus the stock remains within shortable range at current levels, although it could continue higher. When and where it fails, assuming it does, will likely depend on the general market and whether it rolls over or attempts to continue its rally and bounce off the lows of last Tuesday.
Fair disclosure: We are short AAPL and ALXN, but may be in and out of both stocks or either stock depending on the action of the stocks themselves and/or the general market.
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