Apple Setup Begins To Move
I really like this chart of Apple (AAPL), as I have been watching it develop over the last several weeks. The move yesterday to push past $86 resistance and the 50 day moving average -50 DMA- was huge, as the stock not only closed above both resistance points, but also closed with nice accumulation volume.
With this out of the way, the stock now has room to move up towards $92-$93ish resistance. So where do we buy in though? Taking a position around today’s close in the $89.50 range could be a great buy price still, but I think we will have an opportunity to steal shares under $88.
After moves like this one, stocks typically have a tendency to retract back down on lower volume temporarily. I think you we have a good shot at seeing Apple trade back under $88 again, if maybe just intraday. This is because as the 50 DMA starts to pull up again, it will be very tempting for the stock to use this support atleast once more before making a move into the high $90s.
Either way you look at it, this chart is very bullish. One option may be to buy half your position now, add 25% more if you see a dip back under $88, and add the rest after a short term base breakout. Another option could be to wait for that 50 DMA to get leaned on, and buy under $88 or even $87 a share, then add more as the stock shows strength and moves back in the $90s. Either way you take your position, our downside risk needs to be maximized, and I say if the stock falls under $86 on high distribution volume, this would be a pretty valid argument to walk away.
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