Stock Trading Predictions & Technical Analysis

Wednesday, October 21, 2009

AAPL - STRONG BUY

Today, as expected, AAPL closed over its resistance level and all time high at $204.92, giving us a STRONG BUY. The BUY SIGNAL was indicated when AAPL had a breakout yesterday, the BUY SIGNAL, became a BUY CONFIRMED, after seeing AAPL hold above yesterday's lows, and finally the STRONG BUY is now issued because AAPL has gone over its critical resistance level, closing at an all time high. AAPL for now, is a long term hold, as long as this trend persists and remains above its 50 day MA. The MACD & Stochastic have both given us BUY SIGNALS, and the Volume has been increasing as well today. The Stochastic however is near resistance levels, but a move above it would be bullish. What's great about AAPL is that it's a slow moving stock, meaning that if it were to actually give us a SELL SIGNAL, it would probably be more reliable than more volatile stocks and we would also have more time to react without sufferring a big loss.

I expect to see AAPL continue trending up along its channel which has been holding up strong since the beginning of the year. However, AAPL is currently in overbought territory and near resistance. This means that you can expect in the very short term to see AAPL perhaps have a minor pullback, around its support level at $198.00-$200.00, but the long term trend is up. Note that stocks such as AAPL who continually enter overbought territory and have the tendency to remain at high levels within the RSI, indicates that the stock is indeed trending up, and this is a sign of strength.

AAPL appears to have started a 4th up trending channel, after its jump following the earnings report. You can observe this in the chart, indicated by the blue trend lines. The pink line represents the major trend up, and the blue lines the channel trends with the major trend. I have raised my stop loss order to $195.00; This would indicate perhaps the reentry into a lower trending channel, but still within its major trending channel. The reason I have raised my stop loss, is to lock in some gains from my average position at $185.00. I may eventually set a Virtual Trailing Stop Order, once the trending support and resistance levels are more clear. Basically I have to measure the average dollar value difference between the support and resistance line, to set a fixed dollar trailing stop order.

As I posted in one of my previous posts, according to Fibonacci, AAPL has now the potential to go as high as $300.00 within a year. For now I expect to see AAPL trade within a new channel indicated by the bottom blue line near $200.00.

Long AAPL @ an average of $185.75 - Stop Loss @ $195.00

1 comment:

UnknownOctober 22, 2009 at 3:20 PM
Hi Yoel, I bought AAPL at $ 198, and later following your advise I bought again at $203.
Do you think the next entry point might be $208?
Thanks
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TECHNICAL INDICATORS

BUY SIGNAL: Indicates the possibility of the start of a new up trend or the continuation of the current up trend. This signal may be often given in the early stages of a potential new up trend that was preceded by a down or sideways trend. Such signals do not always succeed and may fail at time.

BUY: Indicates that the current up trend is already in motion and a BUY SIGNAL was already given earlier. A BUY does not necessarily indicate that the stock will continue higher from here, but simply that the stock is trending up. The further into the trend you decide to take a long position, the more risk you have of seeing it reverse back down sooner rather than later.

STRONG BUY SIGNAL: Indicates a stronger, more significant and reliable signal than a BUY SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG BUY: Indicates that the current up trend is already in motion and that STRONG BUY SIGNAL was already given.

SELL SIGNAL: Indicates the possibility of the start of a new down trend or the continuation of the current down trend. This signal may be often given in the early stages of a potential new down trend that was preceded by an up or sideways trend. Such signals do not always succeed and may fail at time.

SELL: Indicates that the current down trend is already in motion and a SELL SIGNAL was already given earlier. A SELL does not necessarily indicate that the stock will continue lower from here, but simply that the stock is trending down. The further into the trend you decide to sell a position, the more risk you have of seeing it reverse back up.

STRONG SELL SIGNAL: Indicates a stronger, more significant and reliable signal than a SELL SIGNAL which usually has less chance of failing. Such signals do not always succeed and may fail at time.

STRONG SELL: Indicates that the current down trend is already in motion and that STRONG SELL SIGNAL was already given.

HOLD: Indicates that traders who already hold this stock, should hold on as long as the trend persists. This signal is usually given during an up trend for which it would be considered too risky to take a long position at this point.

STRONG HOLD: Indicates that the current trend has been in motion for a while and rarely deviated away from the trend. Although the stock may continue higher, there may not be enough potential up side to trigger a BUY SIGNAL. This type of indicator usually means that the stock has very strong support levels which may have been tested but not broken.

WAIT: Usually given during a sideways trend for which we are waiting for a move that would trigger a BUY SIGNAL or SELL SIGNAL. This could also indicate uncertainty and the risk that would be taken if you were to take a long position at the current level. Taking a long position after giving a WAIT indicator is considered a gamble.