Apple, Inc. engages in the design, manufacture, and sale of smartphones, personal computers, tablets, wearables and accessories, and other variety of related services. It operates through the following geographical segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific.
Take a look at the 1-year chart of Apple (NASDAQ: AAPL) with the added notations:
During the past four months, AAPL had formed an important level of support at $255 (red). The current correction saw the stock break below that support. Not only did that imply lower prices for AAPL, but the $255 area will now likely act as resistance on future rallies, as it did multiple times last week.
The Tale of the Tape: AAPL broke a key level of support at $255. A trader could enter a short position on any rallies up to or near $255 with a stop placed above the level. If the stock were to break back above the $255 level, a long position might be entered instead.
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