So what do we do on Apple (AAPL) now? Buy it or short it? (January 28, 2013)
AAPL
I’m Dan Fitzpatrick at Stock and OptionMarketMentor.com on January 28th, that’s a Monday. I want to go back and look at Apple ( $AAPL Apple Inc ). I talked about Apple ( $AAPL Apple Inc ) recently in our Free Chart of the Day video, so we’re going back to the well here. I described, if I recall correctly and I think I do, a head and shoulder pattern, you can see it here; left shoulder a higher high, which turns out to be the head because it’s followed by a lower high and then finally a break of the, quote, neckline, which is just simply the line that connects this point and this point, just a straight line, don’t need three points to make a trend line when we’re looking at a neckline, all we need is an extended line between two points. So the idea is, the stock breaks below $500.00, we take the same distance from the neckline to the high, here, and we extend that from the neckline, wherever it’s broken, to the low, and that’s somewhere around $310.00, $320.00, $330.00, something like that. That is seen, among technicians, as a minimum move, that is a measured move, it’s just simply the way you trade head and shoulder patterns. But this is really important because actually I’m long Apple ( $AAPL Apple Inc ), even though I really want to, as I’ve said repeatedly, short the snot out of it and it has been right to be short, it is still right to be short if you have this type of time frame. But if you’re a trader you got to look at this, we can expect, as a typical textbook head and shoulder pattern, a retracement that tests the breakout. It should test the breakout meaning breakdown, it should test this, that had been prior support, see if it’s resistance, if the stock rolls over that’s when you get short again. So we’ll look at the daily chart here, look at the volume, on Thursday’s big gap down, that was the highest volume, Friday, really, really high volume as well, just not quite as high as a previous one. Today we got a reversal, a gap down a little bit from the open, not too bad but a little bit, but actually I noticed it had been trading pre-market, a little bit higher. So I got long first thing this morning, by some call options and I’m going to sit there and ride these puppies until the stock gets up to $460-$470.00, I mean we’ve got a gap here, that, you know, a lot of traders say, “Well that gap needs to be filled.” Gaps aren’t always filled, check out all the gaps on Amazon ( $AMZN Amazon.com, Inc ) back when it first started trading; if only those things would be filled. But still, we do have a power vacuum right here, we got a void in between these two prices, and so if Apple ( $AAPL Apple Inc ) comes up to test this level again, let’s see what that is, the high here, $465.00. If Apple ( $AAPL Apple Inc ) comes up to test $465.00 my bet is that’s when you’re going to see some more selling, you’re going to see some selling there. So for another 15 points of upside I think you want to be long Apple ( $AAPL Apple Inc ). After that, you know what? I’m not to be a prognosticator, I’ll leave that to other guys that are either a lot smarter or a lot less honest and I am, one of the two. I’m just telling you this, for the next 15 points or so, assuming Apple ( $AAPL Apple Inc ) does move up, I’m going to stay comfortably long as opposed to the trader Pink Floyd who tends to be comfortably numb. So we’re going to be long here for another 15 points and then we’ll revisit this trade. Oh, and by the way, if the stock doesn’t do what Dan says it’s going to do and instead trades down below today’s intraday low of $435.86, which is just slightly higher than Friday’s intraday low of $435.00. If it starts falling below $435.00, you’ve got to zoom out , look at this time frame again, and realize this puppy is going a lot lower. So longer-term bias downward, short term bias upward, let’s go make some money. Free Chart