Looking for similarities or trends in a stock’s behavior can provide extra confidence in making a decision or sticking with one already made. Most stocks will develop certain character traits as they move up in price. When they deviate from these typical behaviors, it may be an early warning sign that something is amiss. Atypical behavior can include anything from the way a stock handles support and resistance levels, to the stock’s interaction with moving average lines, and even the magnitude of its pullbacks and rallies.

 

Apple is currently testing one of its usual character traits. Notice that after a large gain in price it usually consolidates its gains by trading sideways in a tight pattern for a number of weeks. The highs in the pattern are currently offering some resistance to Apple’s advance. Take notice of the last few days where Apple reversed intraday and failed to close at the highs. If Apple is able to break out and close above the prior highs on strong volume, it would be an indication of technical strength. Failure to do so would be a violation of its previous behavior and could be a sign of technical weakness.