A Potential Opportunity in Apple (AAPL)

Apple Inc. (AAPL) designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players. The Company sells a range of related software, services, accessories, networking solutions, and third-party digital content and applications…

Take a look at the 1-year chart of Apple (NASDAQ: AAPL) below with my added notations…

AAPL had formed a key level of resistance at $125 (red) over the past several months, but the stock broke through that resistance yesterday. That break should lead to higher prices, overall, for the stock. If AAPL comes back down to that $125 level, which could now act as support, a bounce might be expected.

AAPL broke through its key level of resistance at $125. A long trade could be entered on a pull back down to that level. However, a break back below $125 could negate the forecast for a higher move and could also be an opportunity to get short the stock.

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!

Good luck!

Christian Tharp, CMT