Here’s your trade on Apple (AAPL) tomorrow morning. (January 02, 2019)
AAPL
I want to look at Apple ( NASDAQ: AAPL ) here and this is why: You can see what I have drawn here is yet another bearish wedge; I could draw a million of them here. Well, not a million but a lot; this is another one. On a downtrend like this any of these countertrend rallies are typically opportunities to sell because the stock just kind of keeps pouring out of the end of the garden hose. That’s what we have got here.
After hours Tim Cook dropped guidance on the company for the first quarter. There are a lot of different reasons for that but one of the things that he said was basically the iPhone refresh rate or the renew rate, whatever, the upgrade isn’t working like they had anticipated. That’s kind of a big deal; it doesn’t say anything bad about Apple’s ( NASDAQ: AAPL ) products, people are digging their current phones, I am, I have no reason to upgrade, none. I don’t even know what would be new; my phone works fine.
What is does though, is it actually speaks well of Apple’s ( NASDAQ: AAPL ) current products. But also not so much about that they have no whiz-bang thing that people are going to say, “Oh my gosh! A new iPhone that makes lattes for me in the morning (of course with soy, sprinkles and all that).” They don’t have any of that, so that is a real problem for them.
So what are you going to do with Apple ( NASDAQ: AAPL ) tomorrow? This will be a new 52-week low by a lot; there have been many of those recently. But what are you going to do tomorrow. And I will say this; it depends on what your time frame is. If you have a longer time horizon than a day or two or three I wouldn’t do anything. I wouldn’t do anything.
I don’t look at this as the bottom, Oh it has finally capitulation. No, there’s no capitulation here. The stock has been selling off and then rallying. Selling off and then rallying. Selling off and then rallying. And now it’s selling off here so this is a stock that is still under distribution. This could move a lot lower, I’ll say it, if it gets down to 130.00 or so then I would say, “Well, maybe that was a pretty good move.” But that won’t even be a 50 percent retracement. Apple ( NASDAQ: AAPL ) can definitely give away 50 percent of its market cap. In this kind of market why couldn’t it go down to at least 120.00 or so, even lower?
I am saying, long-term is this really where you want to put your money, in Apple ( NASDAQ: AAPL )? It’s down at a new low. Right. Yes, but look at what’s above it. Everybody that bought in this box is a loser. There are going to be people that are selling so from a long-term perspective, no thank you. I don’t really think you want to sell it either, though. Why? Because everybody else is.
I would suggest doing this: If you own Apple ( NASDAQ: AAPL ), if the stock trades below this print here, 144.51, go ahead and set it at 139.00 if it is a long-term position of yours. But for crying out loud have a stop somewhere, because this is the “slope of dope” here; sliding down and then rallying a little bit. Sliding down, rallying a little bit. At some point you have to say, “Uncle.” If the stock falls to a new low, like below this 124.00 level, and it probably will, and it stays that way in the morning. I think if you are a long-term holder you really need to sell the stock.
Think about it, it is the first of January, let’s say you have been holding this stock for 15-years, I don’t know, at some point you have to ring the cash register on it. There is just no way around it because you don’t get to make any money if you haven’t liquidated your position. You have got an entire year to deal with the tax implications. But with that said, you have to be comfortable doing it. This isn’t a trade for me, I am just trying to shine some light on it for you.
If you look at this on an intraday basis this is a different deal. My bet is, you will probably, in the morning, see this stock fall even further on some downgrades. You are going to see that. Analysts never downgrade a stock when it is up. They always wait until everybody has lost their money, then they downgrade it. Why? Because they are not very good, frankly.
If you are a short-term trader, I am talking a day trader or a swing trader, wait for the stock to open up tomorrow. Hopefully, it is down BELOW this lower Bollinger Band here and then wait for it to start snapping back. Then you could take the stock for a ride to the long side. I think that is going to be your trade in the morning as long as the stock stays above whatever it opens at. If it opens low and then keeps going down DO NOT BUY THE STOCK because you would be clearly wrong in doing so.
There is more selling going on and DO NOT, don’t let me catch you saying, “Oh, I will buy it here because it’s going to turn around.” Dude or ma’am, you don’t know, nobody knows. Nobody knows what the stock is going to do. What you are doing is managing risk. You’ve got an idea. You’ve got an approach. You are prosecuting that approach. You are not destroying it you are prosecuting it.
And your approach is, I want to be on the right side of the trend. Pick your time frame. On an intraday basis you need to see the trend moving up. The only way you can do that is to have an objective level and that is, where did the stock open up? If the stock is ABOVE where it opened at then you are good to go for a short-term trade. If it is BELOW you don’t want to go near that, there is still selling. Then, Oh, should I short? No, the stock is down too much. You are either buying an oversold bounce or you are totally staying away from it; one of the two.
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