Apple, Inc. (AAPL) – July 1, 2007

by DAN If you haven’t heard that the iPhone launched last Friday, then welcome back you’re your long walk through the wilderness. The launch was certainly a success, though there were some well-publicized glitches with AT&T’s activation process. I think the activation glitch is a non-starter. This type of thing happens when a product is in such hot demand. It highlights the strong demand, not the inferiority of the product.

My question is a simple one — with so much publicity having been showered on the iPhoneeven on Friday during the trading dayhow much upside is left for the stock? Did anyone really doubt that the phone would be a hit? I catch myself thinking, “Wow. Could things be going any better than this?!!” My answer is less important than the market’s answer. If the market can’t see any new upside for the company right now (i.e., upside that has not already been discussed and contemplated by the market), then how much buying pressure will there beand will it be sufficient to soak up the “sell the news” supply?

Let’s look at the chart.

I’ve highlighted the pennant pattern. Also, note that the “stop” is well below the current price. Because this stock has been just so strong, I continue to believe that the stock is a buy on deep pullbacks. But I’d suggest keeping my eye on the 50-day moving average. If the stock starts trading below that key average, then the bloom may be coming off this rose.

But be mindful of those tight Bollinger Bands. This type of “volatility squeeze” can produce explosive price moves that reward those who know what to look for.

To see a video analysis of Apple, click here.

Workshop Schedule: I will be teaching a series of trading workshops in August (Los Angeles and Charlotte) and September (Dallas and Newark). One of the topics of the “Beyond the Basics” workshops will be trading volatility squeezes. I have kept the tuition quite low ($249.95 for Mentor Members) so if you get a chance to attend, I’d love to meet you.

To get more information about the Workshops, click here. And if you have any questions, you can email me here.

Have a good week and a wonderful Fourth of July Holiday.

Dan Fitzpatrick
www.StockMarketMentor.com

 

Free Chart