Apple Inc. and its wholly-owned subsidiaries design, manufacture, and market mobile communication and media devices, personal computers, and portable digital music players worldwide. It also sells software, services, peripherals, networking solutions, and third-party digital content and applications related to its products. The company offers iPhone, a line of smartphones that comprise a phone, music player, and Internet device; iPad, a line of multi-purpose tablets based on Apple’s iOS Multi-Touch operating system; Mac, a line of desktop and portable personal computers; and iPod, a line of portable digital music and media players, such as iPod touch, iPod nano, iPod shuffle, and iPod classic. It also provides Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and various accessories, service and support offerings; and manufactures the Apple LED Cinema Display and Thunderbolt Display.
To review Apple’s stock, please take a look at the 1-year chart of AAPL (Apple, Inc.) below with my added notations:
Notice the rising wedge I have outlined on the chart of AAPL. A rising wedge price pattern is essentially a type of triangle formation in which the stock (AAPL) has formed an up trending resistance line and an up-trending support level (red). These two trend lines converging on one another combine to form a rising wedge, which is usually a terminal pattern (bearish). Confirmation of this pattern would occur if the stock broke the up-trending support.
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The Tale of the Tape: AAPL has created a rising wedge pattern, which should lead to a break lower. A short trade could be entered on a break out of the bottom of the wedge, which currently sits near $500. If a trader believes the stock has higher prices in it’s future, a long play could be made at that support with a stop placed below that level.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach