- Posted by hcpg
- on October 7th, 2012
$AAPL gave traders a lot of interesting action this week and next week looks just as critical. Let’s take a look:
On Tuesday we had the test of the 50sma which every respectable trader had on radar as buy (and of course it was featured in the HCPG newsletter the night before). The first test of a major level– and an ascending 50sma that hadn’t been tested since August qualifies as such– is always a buy in our books. If it’s trending lower on intraday we wait for overshoot, but in one way or another, we always get involved.
This was #1 on chart– nice bounce into the close on Tuesday, and follow through on Wednesday. On Wednesday night (#2) we wrote to our members that the follow through for the 50sma buyers was nice but it was “too cute” to think that was the low. On Thursday we had a pull-back and on Friday the second test of the 50sma (#3).
Now any long-time HCPG reader will tell you that one of our main strategy points is to buy the first test of support, but NOT the second. If AAPL had re-tested the 50sma in 3 months then yes, we’d be happy to buy it again, but two times in one week makes it much dicier. It could bounce after a head-fake down through Tuesday low but that type of trade doesn’t contain enough edge for our type of trading.
However, we would be interested in the following levels: 644 which is the April 10 high, and 620 which is the 100 sma/support zone. There’s also a gap fill at 636 which could be good for a trade.
Why watch AAPL? Not only because it leads the market but more so because it right now is the ultimate trading stock, sticking to the TA script and telegraphing its move beforehand at a much more successful rate than other stocks. These type of trading nirvana for stocks never last too long, so take advantage while you can, before it turns into a $WLT (which used to be an amazing trading stock before it turned into one of the trickiest ones).
Click to enlargen:
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