Apple (AAPL) — Watching $500 for direction.

Discussed in this article: Apple Inc ( $AAPL )

I want to follow up here with Apple ( NASDAQ:AAPL ) and then I’ll be moving on to something more interesting. Apple ( NASDAQ:AAPL ) did not really bounce, it wasn’t like a dead cat bounce, it didn’t fall hard and then rally very much. After disappointing earnings yesterday you can see the kind of volume that the stock had today, like massive volume. The stock closed down 8 percent and with this much volume that is all selling pressure. Obviously there are buyers at this level otherwise the stock wouldn’t have changed hands, but sellers were really aggressive here, because if they weren’t the stock would have rallied, a lot of this stuff is kind of counter intuitive.

So here’s the thing, you look at this stock intraday, don’t pay any attention the moving averages, because I didn’t change them, the stock was just trading sideways, this is classic distribution; every time the stock rallies a little bit sellers come in and sell the stock. So this could be, and I actually put a bull put spread on this stock this morning, out-of-the-money one, but if this stock starts trading below $500.00, which isn’t too far from where it is right now, this can turn out to be kind of a problematic trade. I’m a big fan Apple’s ( NASDAQ:AAPL ) products, I just bought a new iPad yesterday, they call it space gray, like to call it gunmetal gray, but that’s just me. Anyway, right now I’m not really looking at today’s intraday low of 502.00, I’m not looking at that as support, I’m looking at 500.00 as support.

If Apple ( NASDAQ:AAPL ) can stay above 500.00 for a bit that will stabilize, give the Bollinger Band a chance to move lower so that the stock is statistically back kind of where it should be. But if Apple ( NASDAQ:AAPL ) starts trading below $500.00 I think you want to get out of this, and I don’t care how much the money managers on CNBC squawk about Apple ( NASDAQ:AAPL ) being so cheap. The market knows what Apple’s ( NASDAQ:AAPL ) worth. If you can buy it at $506.50 that’s not cheap, it’s the market price. If somebody’s such a fool that they’ll sell this stock to you for $400.00, like right here right now, that’s cheap. The stock finds cheap, the stock finds expensive, and it stays right in between the two, usually by a penny or two.

So don’t be fooled by that fundamental analysis crap totally, in other words, you can use both, you need to use both. But when the stock is telling you that buyers are not coming in, why would you want to blaze your own trail? If you want to do that go get the flux capacitor, go back to the wild, wild west, and hang with Lewis and Clark, you can do plenty a trailblazing then. Otherwise, just wait for this stock to stabilize, and then go long, or frankly, if it falls below 500.00 short it.

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