Everyone either knows all about Apple (AAPL) or is tired of hearing all about Apple, but what they cannot deny about Apple is the sheer amount of trading AND investing opportunities that it provides. As a long time trader and investor, I think I speak for most when I say traders are opportunists, but at the same time, have a deep appreciation for value. I would bet you that 3 out of every 4 traders is long biased. Especially when in an artificially inflated and raging bull market like we are now. And long biased people love a good deal. That is what Apple provides people with. Not in the sense of a discounted product, that would be uncharacteristic!
The reason why traders love Apple is because of the clean price action, obvious support and resistance levels and the never ending supply of fundamental catalysts in play. In our chat room, we have swing traded Apple stock a few times this year, for a total of over 20 points! Apple has been by far the biggest and cleanest trading swing trade we have alerted this year. How do we do it? It is quite simple really. Alarmingly simple.
We know that Apple is on its way up. It is likely going to be the first company ever with a trillion dollar valuation. If the hype, the bubble and the momentum stays favorable, it will be a reality. As traders we know we can’t just chase the big moves. There is so much more profit in finding the swing trade opportunities. And that is what I have done.
Even though Apple has a tendency to trade with the broader markets on some level, it still respects the trend and pattern that it’s in. Knowing that Apple has strong days on when the broader markets are strong, and that after big multi point moves, it tends to sell off back to a natural support level, it really becomes a matter of timing.
After the big earnings beat last quarter, Apple shot up and tested the major $120 resistance and all-time highs. Once that key $120 level was broken, Apple ran straight up to $133.60 in 10 days. Activist investors, retail traders and even CNBC’s Jim Cramer all praised the stock and called for unbelievably high price targets close or over $200.
Naturally, after any big runner, Apple experienced a pull a back as profit takers and shorts brought the price down below $125.
Once it tested the $122 low during that time period on a couple of occasions, it started creeping back up. We waited for candle over candle confirmation of the move and got long, scaling into strength on the way back up to $129. Once we got out exit indicator (a previous daily low being breached) we took our profits and ran. Again, Apple sold off and tested the $122 area where the 50 moving average is now resting. Putting in a double bottom, Apple began to curl back toward the 20 moving average. Once again, we are looking to capture the move back to $130.
It is CLASSIC patterns like those seen above with Apple we seek to find throughout the markets. The trader who survives across varying market conditions is the one who understands charts, understands the support and resistance levels and also seeks to understand any fundamental catalysts that are in play. Couple those basic techniques with a SOLID risk management strategy and risk to reward profile, and you have the beginnings of the recipe for a success swing trading strategy. I talk all about risk management in my swing trading courses and have outline the major concepts in multiple previous articles, here and here. It is the single most important factor in a trader’s longevity!
If you have any questions about swing trading, strategies or anything trading related, feel free to email me [email protected]