Every afternoon we scroll through over 200 different charts looking for interesting patterns to comment on. Sometimes we find a Fibonacci rhythm that looks compelling (our recent prognostications on Lucent); other times, an Elliott Wave pattern that is complete. Occasionally, we'll see an interesting "coil" pattern, and once in a while, a classic Edwards & Magee chart pattern on a given stock.

For those who have not heard of Edwards & Magee, they wrote perhaps the definitive text on classic technical analysis -- and how and why it works -- way back in the 1940's. The book is now in its 7th reprint and despite the dated examples, is an easy-reading treatise valuable even today.

It is with Edwards and Magee firmly in mind that we turn to today's Chart du Jour: Apple Computer. We ask one simple question: Is that a huge Head and Shoulders top (with small double shoulders, the last just about to form) that we spy?

Chart created using GET End-of-Day

If it is, the implication is that while Apple has rallied from $5 to above $70, it may easily revisit the $5 region yet again. With the 200-day moving average now above the current price, that moving average should act as resistance for a potential final thrust up. After that, we'd keep a close watch how this pattern further develops. The June break of the January lows is a very negative portent.

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Sand Spring Advisors provides information and analysis from sources and using methods it believes reliable, but cannot accept responsibility for any trading losses that may be incurred as a result of our analysis. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, and should always trade at a position size level well within their financial condition. Principals of Sand Spring Advisors may carry positions in securities or futures discussed, but as a matter of policy will always so disclose this if it is the case, and will specifically not trade in any described security or futures for a period 5 business days prior to or subsequent to a commentary being released on a given security or futures.