AAPL Potential Trade Setup
AAPL has been in a nice uptrend since last July and has now pulled back.. I always want to buy strong stocks with good momentum on pullbacks if they present a bullish pattern to buy.. I do not buy stocks just because they pulled back.. I wait for some kind of bullish confirmation pattern to develop so I can increase my odds of a successful trade.
If you look at the above chart, you will see AAPL has held it's 30 day moving average.. As long as that moving average is sloping upward and AAPL's price is above it, I consider the trend to be up which it is. Notice as point (A) in October AAPL pulled back and formed a small 123 pattern..A 123 pattern is a low followed by a high followed by a higher low.. When that high is taken out(point 2) you buy.. That trade was good for about $10 from the buy point in October in just a few days.. Well now I see the same pattern setting up.. At pont (B) we have a low which is right on the average, followed by a high and right now we have a higher low which is NOT confirmed yet. A higher low will be confirmed if point 2 is taken out at 90.00. This is where I would buy AAPL looking for a move up. If AAPL doesn't get above 90.00, I will do NOTHING.. Don't try to be cute and jump the gun.. You have to wait for 90.00 to be taken out..If AAPL sells off taking out the low from a few days ago and breaks the average, I will leave the stock alone because the pattern will not be there anymore. Let's see what happens
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5 comments:
what are your thoughts about patterns that are affected/created by news, ie. october's move up in AAPL was due to earnings.. do they still hold the same validity? thanks!
Yes they do hold the same validity.. My opinion is that we are not trading stocks, we are trading people. People or traders create the patterns based on news,rumors, fear and greed etc..So patterns created by news do have validity...Nothing works 100% of the time. I just use the charts to try to find an edge and see who is dominating the price action. Is it buyers or sellers? If it's buyers then that is where I want to be.
Today's selloff maybe due to year end profit selling by mutual funds. But the earnings release and new products announcements in January should proper this stock. What do you think?
I think I'll let the stock tell me what to do...I'm not going to guess or make up something to tell you.. If the stock wants to go up and there are buyers, I will see it in the charts and volume and then I will buy...but until then I haven't a clue what is going to happen..nobody knows if you really think about it.
AAPL has rebounded nicely from the 50 dma. What's your take on it?
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