AA is uptrending off 8.00 support. The stock has one hurdle left before we think it runs back to 10. That hurdle is 200 day Simple Moving Average (green line).
At this point it’s a wait and see situation. If and when it breaks, we’re buyers.
We shared our bearish AAPL analysis a little over a month ago which was spot on. The question is, what’s next?
The image above references the same three up trend lines we noted in our previous article. We find it interesting that AAPL actually broke the optimal 45 degree up trend, and since doing so is now hugging along the support turned resistance of that line. This has resulted in a very tight trading range in AAPL this entire week.
One never knows what will happen next, but we suspect continued range bound price action until AAPL runs into the initial up trend support line. At that point, we may start to see some upside in the stock.
The play here may be an Iron Condor given the somewhat high levels of volatility premium priced into shares of AAPL. We intend to explore this strategy, along with other range based options strategies.
We have not written about AAPL in a while. The stock has been on an amazing run, but this parabolic move has been one we have avoided. Reason being, we are in the “this parabolic move in AAPL is going to end ugly” group. That said, AAPL is a short killer and trying to fade it rarely proves profitable. Therefore, we are just staying away for now.
So we’ve established we haven’t traded AAPL in a while, but we have been watching it on a daily basis. Let’s take a moment to discuss it.
On January 25th, AAPL blazed through 425 resistance (red line) after reporting killer earnings. This resistance break is noted in the first image above. As you can see, the upside earnings gap took it well above resistance and the stock never looked back. An absolutely amazing run that must be respected.
Let’s move on to the next image. Note the three yellow lines. These lines indicate accelerated up trends. Prior to the earnings gap, there were two uptrend lines established. The first line was a little flat, approx 35 degrees. The second line was the optimal up trend angle of 45 degrees. This latest line that has held since January 25th earnings is very steep, representing the parabolic price action we noted earlier. Lines this steep never stay in tact. We are keeping an eye on it, and intend to place a bearish strategy on AAPL when we see a closes below that line.
(click images to enlarge)
There is an attractive setup taking place in Gold Futures (/GC) at the moment. In the first picture, note the extremely strong uptrend support line (yellow line) that has been in tact nearly THREE YEARS! Below the three year uptrend support lies secondary support via the 200 day simple moving average (light blue line).
In the second picture, we show the symmetrical triangle (purple lines) that recent broke in a bearish manner. The move measures to 1350. Shortly after the bearish symmetrical triangle break, Gold pushed below the three year uptrend and 200 day simple moving average support.
That’s a major bearish technical development. With today’s bounce to 200 day SMA support turned resistance there is a solid reward to risk scenario in tact. We like to compliment these types of situations with high probability of success options strategies, and we intend to do just that for our members.
