Stock Trading Predictions & Technical Analysis: AAPL

Wednesday, December 9, 2009

AAPL - Morning Star Formation

AAPL - BUY SIGNAL

After giving us a STRONG SELL SIGNAL just a couple days ago, AAPL has quickly bounced back up to now give us a BUY SIGNAL. First, yesterday AAPL had given us an inverted hammer pattern which usually is a sign of a bottom, and today that possibility was strengthen with the formation of a morning star pattern after today's strong move up. On top of that AAPL has also crossed back up over its 50 day MA, and is now looking to resume its major up trend. AAPL managed to bounce back up its critical support level of $187 which I had indicated a few days ago. This quick reversal indicates the strength of AAPL's up trend. I have seen this pattern on a few occasions with other stocks who were in a strong up trend that had given us SELL or STRONG SELL SIGNAL before quickly bouncing back up. After seeing the morning star pattern I decided to take a long position in AAPL despite hesitating at first seeing potential resistance around $207. However, I finally decided to take my position in AAPL based on the fact that I feel very confident of seeing AAPL start moving higher from here. Even though AAPL could fail to go over $207 in the short term, this would still provide a return of around +5.00% with very strong support at the 50 day MA and the fact that my stop loss order of -7% /-8% is below the last low around $187. Basically I see very low potential of having my stop loss triggered and if AAPL reaches $207 again, this doesn't mean it won't break above it to move even higher. AAPL is a slow moving stock that can provide slow but steady returns, without too many bumps along the road. I have also set a STOP BUY order over with a +2%-3% move over my current entry point to double my current position. Even if AAPL continues to trend sideways for a while between $187 and $207, my stop loss order would not get triggered and the longer you stay in a position without being stopped the stronger potential it gives you of achieving higher returns in the long run. The goal in any position is not only to be able to buy into positions near strong support levels after a BUY SIGNAL, but also to be able to hold on as long as possible when the stock starts trending up without having your stop loss triggered. This gives you the potential to achieve higher returns in the long run.

LONG AAPL

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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.