I so much want to believe in Apple. My iPhone 5 is my third iPhone, and my new iPad/Retina doesn't leave my side. I'm seeing countless companies starting to incorporate the iPad into their product or services line. I'm seeing iPhones and iPads everywhere.
Apple just announced earnings. They stated that in the last quarter they sold 31.2 million iPhones and 14.6 iPads. Think about that. Yes, those are international sales numbers. But with the US population at 311 million, Apple essentially sold enough $400+ devices in that quarter to outfit 1 out of every 7 Americans.
Back in the May 28th Seasonal Forecaster newsletter, I looked at the prospects of AAPL. Saying it could be forming an Inverted Head & Shoulders bottom, the key was to focus on a breakout of the 470 level. If it occurred, AAPL should be off to the races:
But there's a reason you look for breakouts – especially for breakouts accompanied by strong volume, they are confirmation your analysis is correct, and the odds of success greatly increase when there is confirmation.
AAPL didn't follow through. Instead, it has meandered sideways to form an almost 5-month trading range.
My trading approach to AAPL right now would be to trade it as a trading-range stock. Above average volume has been coming in only on up-close days. Fundamentally, Apple is a strong company, with a new product sales cycle starting soon. Don't bet against this company.
So while in the trading range, I would play only upside moves, only bullish trades. When AAPL gets near the top of the range I would exit positions and not take bearish trades. I would wait for AAPL to fall at least to the middle of the range before considering new bullish trades. And if AAPL broke out above the trading range, especially on strong volume, I would quickly evaluate bull call spreads.
The April and June lows stand out on a weekly chart as a double-bottom. I do think an intermediate-term bottom is forming in AAPL. But for right now, the upper trendline at 470 is a short-term target.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, type in www.markettamer.com/seasonal-forecaster
Copyright (C) 2013 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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