Here’s how that Apple (AAPL) trade worked out. (January 03, 2019)


We are looking at Apple (NASDAQ: AAPL ) again. Yesterday after the close Tim Cook issued a release lowering their guidance; just all kinds of bad things, and the wheels came off the wagon in Apple (NASDAQ: AAPL ). When the stock was down here I said, “Hey, here’s your trade.” You got to look at the stock as being under a lot of pressure. You don’t want to short this stock because it is down so much; there’s going to be buyers coming in.

What you want to be doing is, if the stock is down quite a bit, it wasn’t down 10 percent, 8 or9 percent I think, but if the stock, when it gaps down, if it trades back above its opening print then it is a stock that is probably going to higher a bit. But if it does not then don’t do anything. Don’t buy it but also don’t short it. You are making the obvious trade. Oh, the stock is down big. I am going to go ahead and sell it; I am going to short it. No, the time to do that was before it’s down big and then you are taking profits.

The stock traded up a little bit today. I’ll be honest; I was kind of looking in other directions because it wasn’t moving a lot. I saw in the first minute or so that it was doing okay, I had been watching it pre-market. I did take a small position here because, here’s the opening print here, down at this level it’s trading up a bit, I’m saying, “Well, I’ll put my money where my mouth is.” So I buy a little bit of stock. It starts farting around here trading at the same level and I am thinking, wait a minute, I’ve been here before.

If a stock that’s down like this, particularly a high profile one, does not move up right away it means that there is a lot more selling pressure than there is buying interest. And so I closed it out for a very small loss; a little bit less than $1.00 per share is what I lost. And I am okay with that. Even if I had ultimately made money by holding the stock, that wouldn’t have been the good trade because that wasn’t my trade, that’s not what I wanted to do. I had an idea; I knew what I wanted to see.

I wanted to see this stock gap down and then trade up. I am not expecting this kind of thing; this is not the market that we are in but I was looking for a few bucks, maybe $2.00 or $3.00, I would make. But then when it didn’t happen right away I get out. Oh, I got have got to get back in that stock and make that money back. No. I don’t care about getting my money back from Apple (NASDAQ: AAPL ) I just want my money. The reason I am going into this with you is to give you some continuity. If you have an idea about what a stock is going to do and you act on that idea you always have to be alert to the possibility that you are going to be wrong. And you will over time make really good money even if you are wrong half the time. A lot of really good traders are wrong at least half the time.

The reason that you will still do okay is because you will have a plan for managing a bad trade; a trade where you are wrong in and you get out quickly. And then the ones where you are correct in you are going to make a lot more money than you lost on the ones that you were wrong on and it’s because you had a plan. You are managing risk here. That’s the deal with Apple (NASDAQ: AAPL ).

Now going forward, frankly, there is no possible way I would buy Apple (NASDAQ: AAPL ) unless I did it by mistake. I am not really sure that I would short the stock yet so let’s just leave it here; I would not be buying Apple (NASDAQ: ) here. It’s right down at this level here, the 2017 level and I am sure somebody will mention that on CNBC tomorrow. This is so far back it doesn’t even matter; it doesn’t matter. But this would be a natural place to buy.

What I am telling you is, don’t do it. If the stock is going to ultimately move higher it is first going to need to move lower. You don’t need to be a part of that move. There is massive institutional distribution. A very, very overly owned stock and the reason is because what money manager is going to get fired for owning Apple (NASDAQ: AAPL )? Nobody. Although, if it keeps up the way it is going there are going to be plenty that will.

So the trade was to buy this thing if it traded above the opening print. It did but it didn’t last. You are stopped out, you get out of there and then you move on. You don’t sit here and wait to get back at Apple (NASDAQ: AAPL ). Just move on, let the stock do what it’s going to do with somebody else other than you.

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