Building a Base vs. Building a Top

AAPL and its Stage of the Business Cycle

It has been said that tops take longer to form than bases.  One of my mentor's Bill O'Neil (vicarious mentor) has many case studies about chart patterns and their need to base in order for the stock to have some sort of "launching pad" that was caused by all of the deliberation.

What I can tell from this is not necessarily a series of higher highs or a series of lower lows, but this type of price action to me is more of a situation of a range that gets violated in both directions, meaning the tops are blown off, and the bottoms are weak as well.  Clearly, you can tell that since October of 2017 until now price traded between 158 and 183.50  and the upper barrier on this yellow shaded rectangle encompassing most of the chart is about 178.50.  The highs are starting to taper.  Price cannot seem to hold enough strength to stay above 178 anymore and by the looks of it 5 highs were printed for this year and every attempt AAPL makes to get its head above water it just gets denied.

The widest arching top in this stock's history 162.50 to 177.50 - the points above and below to me suggest exhaustion for either buyers or sellers

The horizontal line made for today shoed how the 177.75 price level was the exact completion of the gap created on 4/19/2018 (Thursday)

Lets take a look at this same chart with volume indicated below 

The price and volume relationship can be tricky sometimes, especially around earnings releases.  In this case here I have found it to show more evidence of people chasing price rather than confirming the upswing.  And at times volume can peak at the climax of an impulse or rush higher or lower.  

The surge in volume on 2/1 and 2/2 had the opposite effect where instead of validating the downtrend it just indicated a surge of sellers at precisely the bottom at the time.  

 The company has changed its public perception as a software and services business instead of relying too much on their phones, and that was likely the institutional order flow coming into to create the millions of shares traded and in one sense it similar to a  buy climax.

Price has consistently shown that it can stay above the 50 period moving average for a shorter duration every time it pop above it:  October, February, March and April; when the uptrend was a lot stronger it typically held above the 50 for a much longer duration.  

Now my "building a top" theory could be turned on its head if the company continues to deliver such fantastic numbers from its other services rather than being a "one trick pony" that relies so heavily on phone sales

On the other hand the institutions accounting for all the order flow may have scaled out of the position quietly between 177 and 183.50 without telling the public their intentions of the liquidation, yet for every buyer there is a seller, and a sucker is born every minute.