Strong stock on a weak day? This bodes well for Apple (AAPL). Here’s how you trade it. (August ..

Discussed in this article: Apple Inc. ( $AAPL )

I’ve got to look at Apple ( NASDAQ:AAPL ) today and this is why; you know what happened to the S&P and all the other indexes, big pullback I’m not going to go through them because I want to focus on Apple ( NASDAQ:AAPL ).

The market was generally really weak and Apple ( NASDAQ:AAPL ) was essentially flat, it really just traded flat all day. This is a sign of strength; this is a real sign of strength. If you look at the volume, trading volume was actually pretty high relative to all these other bars, but not relative to the last few days. So it took a lot of buying pressure to push Apple ( NASDAQ:AAPL ) up this high. This has some very, very strong upside momentum and I think it’s going to continue going higher.

There’s a way to really trade this; first of all you’re not going to be able to catch it all at one time, the stocks already gone up quite a bit. If the market starts to fall even further, not saying that it will, that’s for another time; but if the market starts to fall further Apple ( NASDAQ:AAPL ) could be one of those stocks that funds sell because they can, because there’s an underlying bid for it. So they sell a stock like this as opposed to some of these stocks that are absolutely just imploding and they really can’t get out of them without driving the stock down any further.

So I want you to watch for some weakness in Apple ( NASDAQ:AAPL ), and if we get it it’s definitely a stock that you want to buy. From a trading standpoint, you can just look at the zigzags here, after this steep of a move we’re overdue for a little bit of a pullback.

I want to look at the 5-minute chart. Check out how this stock has been trading at the open. It’s like it doesn’t matter whether it opens up or down. The stock gaps up, trades up, buyers come in. The stock gaps up then falls back, buyers ultimately come in. Here, the stock sells off at the end of the day, gaps up in the morning, meanders around a little bit, and then is bought during the day. Today, the stock gapped down, what happened? Ultimately the stock traded higher, a little down on the day.

The point is, it doesn’t even matter whether the stock gaps up or down, folks are coming in, funds are coming in to buy this stock, so it is a stock that’s in demand. If you’re short Apple ( NASDAQ:AAPL ) I can’t help you there, I hope you make money on it, I hope Apple ( NASDAQ:AAPL ) pulls back say to 480.00 maybe even 470.00 testing the 200-day moving average, that would be nice.

However, I don’t expect that to happen, and you know why? Because this is the pullback that everybody’s waiting for so it’s probably not going to happen. So if you really like Apple ( NASDAQ:AAPL ) and you don’t own any, I guess you could take some at this level. My question would be, why do you want to take it when it’s so extended, when the recent high is 504.25, just barely above this current level, what are you really getting by buying now as opposed to waiting for a breakout?

You’re getting in a little bit early but how far do you think this breakout is going to move before Apple ( NASDAQ:AAPL ) ultimately pulls back? So when you’re really looking at buying right now, yes, we can look at the risk to the downside, that’s the obvious risk that everybody looks at, but we can look at it a different way; what is the risk if we don’t buy at this level, what’s the risk of missing out on some big huge monster move?

My bet is, not that much, and we can even mitigate that risk very easily, just set a buy limit; just say, “Okay if Apple ( NASDAQ:AAPL ) starts trading up to 505.00 then I’m going to be mad that I didn’t buy it here when it was below 500.00, but if it trades up to 505.00 that’s a percent that I’m giving up, I’m chasing but at least I know the stocks moving northward. So that would be my suggestion on Apple ( NASDAQ:AAPL ).

Look, hope for a little bit of a pullback, if so you want to buy. If the stock does start to break out that’s fine you can go ahead and chase it, just remember that you and everybody else are doing that too, so I just want you to be careful with this stock; look at the weekly chart, it looks like the turnaround is almost just starting, right? You look at it on the daily chart, this actually looks pretty nice here, up trending MACD, moving average convergence divergence, but if you look at it in this light it definitely looks overbought.

So beauty is in the eye of the beholder, it totally depends on your time frame, absolutely depends on your time frame. What I don’t want you to do is go in too big because you get all lathered up and enthusiastic and think Apple’s ( NASDAQ:AAPL ) going to keep running, then when it pulls down to 495.00 or even 490.00 you get shaken out this stock. This is a stock that’s going to ebb and flow, give it room to do just that. Pick your positions, you pick your price levels very carefully, pick many of them, and buy in slowly.

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