How to use the news to trade AAPL (Apple) (March 25, 2019)
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Let’s look at a couple of stocks; Netflix ( NASDAQ: NFLX ), the overall market, the Nasdaq ( NASDAQ: QQQ ) is down a bit, not a lot but a little bit. So why is Netflix ( NASDAQ: NFLX ) up? It was actually down a little bit pre-market; everybody was seeing a lot of news media talking about Apple ( NASDAQ: AAPL ) because they are going to be unveiling their stuff, their streaming media, and a news service. So you would think that this is a good time to be buying Apple ( NASDAQ: AAPL ) with all this good news, right?
Well, it turns out not to be the case. It seems to me like maybe the stock, up 10 percent in a couple of weeks, probably was because the market was anticipating this type of stuff. What I am saying is, you have got to be anticipating things in advance, that’s what the market does. So here, the last time to be buying Apple ( NASDAQ: AAPL ) was on this initial break out here and then be selling Apple ( NASDAQ: AAPL ) at the actual event.
Similarly, with Netflix ( NASDAQ: NFLX ) traders anticipated the bad news on Apple ( NASDAQ: AAPL ) from Apple ( NASDAQ: AAPL ) competition (Oh my gosh, Steve Jobs lives) on Friday. And yet today, as Apple ( NASDAQ: AAPL ) sells off. What happens? Traders are moving back into Netflix ( NASDAQ: NFLX ) thinking; Okay, I guess Netflix ( NASDAQ: NFLX ) is not going to be the next Blockbuster.
My point is, in this video what you want to keep in mind is that trading on the news is typically a bad idea. And when you do trade on the news, frankly, it should be taking the opposite side of the headline. If the headline is things suck and this company is horrible, blah, blah, blah, buy it, buy it. Oh, things really stink, Boeing ( NYSE: BA ) is going to zero. Well, maybe it is but at some point all the bad news is factored in.
So here today I guess Airbus gets a big order; a bunch of airlines are canceling, at least some are. So what happens? Well the stock is actually up. Why? Well, because after these crashes, not just the crash but the aftermath, all of the bad things that flow from a particular thing get factored in by the market much quicker than those same things become apparent to the naked eye. In other words, the market anticipates reality.
So be mindful of that when you are trading. I remember Maria Bartiromo wrote a book, I never read it, ages ago called Use the News, again, I never read the book, I have got to say that. But if I were to write that same book it would be a half-page pamphlet; if the news is good, sell. If the news is bad, buy, the market has already factored it in. Thanks a lot, now I would like to give thanks to my editors, stuff like that.
Anyway, with that said, I think you can buy Netflix ( NASDAQ: NFLX ). Apple ( NASDAQ: AAPL ), not so much. It is really on Phase 2 of a volatility squeeze, I think you have got to let it run its course but right now this is a stock that you just have to stay away from; I am talking about you swing traders, I am not talking about people that just love Apple ( NASDAQ: AAPL ) for Apple ( NASDAQ: AAPL ). No criticism there, it’s a great company, it will probably go higher but in the interim, I think it goes lower.
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