Hi All,
At a price to revenue ratio of 36:1 at the time of writing, this is one hot stock! But is it really worth it?
We clearly have a formation, but not confirmation, of a double top pattern for APT. We have a clear and solid rejection at the 28.50 zone and a 10% plus drop following. I don't think things are looking good for APT, not necessarily fundamentally speaking (besides the ratio), as I know a lot of people are bullish on this stock but at least from a technical analysis perspective, one has to ask are we about to witness a major trend change with APT?
Now the supporting TA;
Double top pattern
As already mentioned, this is a yet to be confirmed pattern. The break of the middle trough between the peaks @ 20 dollars would confirm the pattern. The red arrows provide us with a possible drop range that we might expect. The larger the variance from peak to middle trough, the larger the expected trend reversal, and this is in fact supported by the underlying trend line established from April 2018, certainly a significant trend change IF confirmed. This alone of-course is not enough, and we do have additional supporting indicators below.
RSI
We have a bearish divergence on the RSI, with a down trend quite clear. The last pump to the second peak was not accompanied by wider market participation, and this trend seems as though it will continue. RSI would confirm at this stage that APT is currently out of steam. A cross of the trend line with accompanying price action would invalidate this indicator.
MACD & Histogram
MACD is showing signs of turning to negative cycle. Interestingly the strength of the recent up trend seems to be quite great albeit short and quick as Histogram clearly shows. This would support the RSI indicator reading and might suggest the last pump was really led by a few bulls, and not wider traders/investors. MACD and histogram fall in line with a double top scenario.
MA's
We can see the last pump pulled back our 7 day MA's over the 50 but has failed with the 20. It does not look like its going to cross especially with the drop we had following the second peak. The 7 day is largely going to indicate where we head from here. Both 20 and 50 are some what flat lining. Interestingly, the major trend reversal suggested by the double top would not only include a down break of the 18 month trend line, but also the 200 day MA. All confirmations of major trend reversal. The MA's do tell a similar story as the above indicators and fall in line with a possible double top scenario.
VPVR
Our volume profiles strongly support the above TA and Double top possibility. Our value zone is below the 18 dollar mark, with the final significant profile in this zone stopping around 11.37. Below this we find the next significant profiles 8.13 and below. These targets do also coincide with FIB levels as the 23.6 sits at that 11.37 dollar zone. Failure for this too hold would give us an 8 dollar possible buy zone target.
Ichimoku Clouds
Its looking like we are going to break again, and we can see trend change confirmed with this indicator.
Summary
We have a very strong case for a double top pattern with most indicators falling in line with the same scenario. A break below 20 dollars would provide us with this confirmation and I think things might get a little ugly from there. Important FIB levels also all coincide with critical pattern events, 78.6 current support, 61.8 double top resistance line, 23.6 assumed target. I think it will be a great buy opportunity, around that price technically speaking, but accompanying fundamentals should also be closely monitored with APT in the coming weeks. 36:1 price to revenue ratios are simply not sustainable, and it is not unfathomable that we see an APT stock lower than 8 dollars.
SELL / STOP TARGETS
Stop loss @ $20.
Profit taking above highly suggested.
The above is not financial or trading advice but possible mitigations if this scenario were to unfold.
BUY / LONG TARGETS
Target 1 @ $12
Target 2 @ $8 and below.
The above are also tentative as even at these prices we still have quite a large price to revenue ratio. Technically however we could see a bounce from these point and accompanying TA at the time would have to confirm any possible trade.
Confirmation
Support @ $20 fails.
Invalidation;
New high created > $29 with a clear and strong candlestick close.
Again, in the long term this stock might be a great performer, but the analysis would suggest we are due for a trend change.
Thanks guys, leave a comment and let me know your thoughts,
Traders-Corner
***
Any trading advice provided has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information provided you should consider the appropriateness of the information, having regard to your objectives, financial situation and needs. You should seek professional personal financial advice before making any financial or investment decisions.
All investment and trade decisions, no matter how well investigated, involve risk.
***
At a price to revenue ratio of 36:1 at the time of writing, this is one hot stock! But is it really worth it?
We clearly have a formation, but not confirmation, of a double top pattern for APT. We have a clear and solid rejection at the 28.50 zone and a 10% plus drop following. I don't think things are looking good for APT, not necessarily fundamentally speaking (besides the ratio), as I know a lot of people are bullish on this stock but at least from a technical analysis perspective, one has to ask are we about to witness a major trend change with APT?
Now the supporting TA;
Double top pattern
As already mentioned, this is a yet to be confirmed pattern. The break of the middle trough between the peaks @ 20 dollars would confirm the pattern. The red arrows provide us with a possible drop range that we might expect. The larger the variance from peak to middle trough, the larger the expected trend reversal, and this is in fact supported by the underlying trend line established from April 2018, certainly a significant trend change IF confirmed. This alone of-course is not enough, and we do have additional supporting indicators below.
RSI
We have a bearish divergence on the RSI, with a down trend quite clear. The last pump to the second peak was not accompanied by wider market participation, and this trend seems as though it will continue. RSI would confirm at this stage that APT is currently out of steam. A cross of the trend line with accompanying price action would invalidate this indicator.
MACD & Histogram
MACD is showing signs of turning to negative cycle. Interestingly the strength of the recent up trend seems to be quite great albeit short and quick as Histogram clearly shows. This would support the RSI indicator reading and might suggest the last pump was really led by a few bulls, and not wider traders/investors. MACD and histogram fall in line with a double top scenario.
MA's
We can see the last pump pulled back our 7 day MA's over the 50 but has failed with the 20. It does not look like its going to cross especially with the drop we had following the second peak. The 7 day is largely going to indicate where we head from here. Both 20 and 50 are some what flat lining. Interestingly, the major trend reversal suggested by the double top would not only include a down break of the 18 month trend line, but also the 200 day MA. All confirmations of major trend reversal. The MA's do tell a similar story as the above indicators and fall in line with a possible double top scenario.
VPVR
Our volume profiles strongly support the above TA and Double top possibility. Our value zone is below the 18 dollar mark, with the final significant profile in this zone stopping around 11.37. Below this we find the next significant profiles 8.13 and below. These targets do also coincide with FIB levels as the 23.6 sits at that 11.37 dollar zone. Failure for this too hold would give us an 8 dollar possible buy zone target.
Ichimoku Clouds
Its looking like we are going to break again, and we can see trend change confirmed with this indicator.
Summary
We have a very strong case for a double top pattern with most indicators falling in line with the same scenario. A break below 20 dollars would provide us with this confirmation and I think things might get a little ugly from there. Important FIB levels also all coincide with critical pattern events, 78.6 current support, 61.8 double top resistance line, 23.6 assumed target. I think it will be a great buy opportunity, around that price technically speaking, but accompanying fundamentals should also be closely monitored with APT in the coming weeks. 36:1 price to revenue ratios are simply not sustainable, and it is not unfathomable that we see an APT stock lower than 8 dollars.
SELL / STOP TARGETS
Stop loss @ $20.
Profit taking above highly suggested.
The above is not financial or trading advice but possible mitigations if this scenario were to unfold.
BUY / LONG TARGETS
Target 1 @ $12
Target 2 @ $8 and below.
The above are also tentative as even at these prices we still have quite a large price to revenue ratio. Technically however we could see a bounce from these point and accompanying TA at the time would have to confirm any possible trade.
Confirmation
Support @ $20 fails.
Invalidation;
New high created > $29 with a clear and strong candlestick close.
Again, in the long term this stock might be a great performer, but the analysis would suggest we are due for a trend change.
Thanks guys, leave a comment and let me know your thoughts,
Traders-Corner
***
Any trading advice provided has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information provided you should consider the appropriateness of the information, having regard to your objectives, financial situation and needs. You should seek professional personal financial advice before making any financial or investment decisions.
All investment and trade decisions, no matter how well investigated, involve risk.
***
Apologies but I forgot to uncover the 20 day MA. Will be mindful next time.