It’s hard not to get caught up in the anticipation of new products and the rapid rise of your favorite stock. Especially at the precipice of what may be the most import event in the company’s history. Of course I’m talking about Apple’s World Wide Developer Conference (WWDC) on Monday, June 9th.

Many investors are expecting, if not willing, Apple’s stock price to go up, up and away. And it may well be deserved, if Steve Jobs introduces the 3G iPhone to the world Monday, and it lives up to the hype. So in the wake of this anticipation and sentiment, it’s difficult to perform a technical analysis. But investors should beware, that there are technical obstacles standing in the path of AAPL.

The Nasdaq made a great move today, breaking through its 200 day moving average, rising nearly 48 points to 2550 (+1.87%). But now the Naz has to contend with big gap down resistance at 2575, put in back in January. And the market is tired. AAPL has a gap down from the same day, along with strong price resistance in the 192-193 range. If the Naz approaches this level, I expect many stocks within the Naz, including AAPL, to labor because of price resistance and the current overbought conditions on the daily and 60 minute charts. Additional weight will be put on AAPL from a strong negative divergence on the MACD (see chart).

 

 

Annotated Chart of AAPL. This chart illustrates the wedge pattern that AAPL has breached and the gap resistance from January. Also note the strong negative divergence on the MACD, which will put weight on price as well. Click the image to enlarge.

AAPL had a great day as well, rising to 189.43 +4.24 (+2.29). Like the Naz, they both accomplished a wedge breakout, AAPL breaking through the top of the wedge, which was defined around the 188-189 range, and the Naz through 2515. These levels should now become support. This presents an opportunity for traders looking to accumulate prior to WWDC, if AAPL bounces off the gap (approximately 192-193) and retreats, it will likely fall back to wedge support. So buying this weakness is a good risk because the wedge, which was previously resistance should now provide support.

The most immediate threat is the Jobs report at 8:30 on Friday morning, non-farm payrolls are expected to decrease by 60,000 and the unemployment rate to remain steady at 5.1%. If it’s poor or flat, expect the indices to retreat, and to weigh on AAPL with significant gravitas. If the report surprises analysts and beats expectations, then the Naz and AAPL will attack their respective gaps. If there’s one economic report that can move these markets, this is it!

From my estimation, there’s simply too much resistance in front of AAPL to break the gap. So, it looks like we’ll be going into the WWDC with a price sitting just under the gap (around 191-192). We’ll need the power of the Steve Jobs reality distortion field to bring us higher.