Last Update: 2.23.15
12.19.14 Friday
[2:04pm CT] Entered Calls @ $112.21
[Daily Chart]
So on my previous article on Apple, Inc., I have depicted three levels I will be watching before going long; and it looks like it was just about $2 shy of my first level of $104 as it bounced off of $106 level on the 16th of this month with a inverted-hammer candle. When it gaped-up above 50EMA on December 18th, I wanted to make sure to wait another day or so to make sure the gap is sustained before initiating long to avoid gap-and-fade action. We also had quite a similar action back in middle-October when we traded below 50EMA for three days (10/15 – 10/17 –see highlighted) and then it gaped above 50EMA and the move continued for over a month; today, we have something similar as we stayed below 50EMA for three days (12/15 – 12/17 –see highlighted) and indeed it gaped above the 50EMA again. Quite interesting pattern there.
About an hour before market close on the 19th of Friday, we’ve decided to enter Calls as its holding up above the gap area.
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12.28.14 Sunday
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[Daily Chart]
So for the entire week, Apple pretty much moved sideways holding up above the gap area, but last Friday, we’ve had pretty constructive move closing above $113.44 which was the recent-resistance. With that move, we have now formed a higher-low in the miner-term which means bulls are trying to cultivate an uptrend here. Gap is still open, 50EMA is now starting to rise along with 10EMA, I think filling $115.30ish gap to the upside might be in stored this week.
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1.06.15 Tuesday
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- Problem: Lower High (blue dotted line)
- Possible Savior: 100SMA (daily)
I am still holding my Calls but now its a losing position. Tomorrow is going to be very important for Apple as we are trying to find some support at this 100SMA with that Doji candle. If we don’t get some follow through to the upside next few days, I do think the selling will continue; and if that’s the case, we might be forming a intermediate-term downtrend as we have already formed that lower high.
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1.08.15 Thursday
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Well I guess the “savior” showed up right on that 100SMA there since my last update. With a powerful gap-up and the follow-through today, it is looking strong for the minor term. However, we do have a downtrend resistance (blue dotted-line) coming down which carries enmity for the bulls, so here are two resistance levels bulls must conquer before attempting for $120 and higher.
- $112.60-$113 downtrend resistance
- $114.20-$115 [12/19] swing-high resistance and also gap area
It will be a interesting battle in those areas.
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1.18.15 Sunday
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- Problem: Downtrend resistance (blue dotted-line) with lower highs
- Possible Supports: Daily-100SMA, rising-uptrend support (red), Fib. 61.8% retracement (highlighted)
Apple is still struggling to make its run to the upside, and mostly because of the development of the downtrend resistance with lower highs in place. Good news for the buyers is that there are still many support-levels sellers must break before the true selling goes into an effect. We did see 1.39% gain on the NASDAQ ($COMPQ) last Friday, and so if we get a follow through on Tuesday on the index, I think Apple can possibly use that environment to move higher.
Still lot of work needs to be done for this chart to look bullish; but first things first, if the buyers can break above the downtrend resistance, I think that’s a start.
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1.22.15 Thursday
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Since my last update (18th), the support levels (daily-100SMA, rising uptrend, Fib Retracement; see previous update) held-up very well last three days. Today, buyers were able to close above the downtrend resistance as you can see in the chart above which is a good sign. I don’t think bulls are completely out of the woods yet until they close above $115ish level; but good news is the price is now have reclaimed above all the moving averages such as 10/20/50EMAs.
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1.29.15 Thursday
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[Yesterday 10:43am CT] Added More @ $116.36
*I did cover Apple on my video last night – click here to watch
We have been looking at the resistance-level (blue dotted line) of $114ish level, which the level that the buyers needed to close well above for Apple to really thrive; because it was the level to overcome to confirm the triple-bottom or the Inverted H&S reversal pattern (see purple annotations) right on that 100SMA (we’ve been talking about the daily-100SMA all through out this post, indeed, it was the most important level for Apple to regain it’s control since early January).
Yesterday, after the ER, it gaped up, bulls were able to close well above that resistance-level; so we’ve decided to add more to our current positions @ $116.36 yesterday at 10:43am CT. Today, with a strong 3.11% gain, our target remains $127-$130ish level. Obvious level to watch is the $119-$120ish level for the next resistance to overcome.
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2.3.15 Tuesday
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On our last update, we talked about $120ish level as a next resistance-level to overcome; and as it seems, last 4 days, the bulls are having hard time pushing above that level. However, I do think we are forming “Bull Pennant” pattern so I think we have high probability breaking to the upside here as early as tomorrow. If we can able to close well above $120ish this week and hold above it, I believe Apple can continue higher at least for few weeks. We are still targeting $128ish level as our next level to close some of our positions we’ve been holding since $112.21.
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2.10.15 Tuesday
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Classic “old resistance new support” (red & green arrows) right on that pivot line (red horizontal line); and today, with Bull Pennant breakout with a gap up; things are starting to look very positive for the buyers. This is a great victory from the bulls after finding support right on that 100SMA back in 1/6/15 (see previous update on it). We will get it’s ups-and-downs, but I believe Apple will have a good ride up to our next target at $128-$130ish. We are still holding our Call positions we’ve initiated at $112.21 and $116.36.
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2.12.15 Thursday
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[11:07am CT] Closed 70% Positions @ $126.36
Earlier today, we’ve decided to close 70% of our Call positions at $126.36 with satisfying gain. Apple pulled back a little bit this morning after getting close to our target at $128ish. I do think Apple got more to go in the intermediate to primary term but not sure about the minor term. We may get a slow down or maybe a pullback here.
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2.18.15 Wednesday
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As we are still holding reminder of our positions, I do think Apple is getting into an “extended” territory. This does not mean that Apple must roll over but it is meaning that we could in the near future as you can see the chart above with the daily RSI. Also keep in mind that oscillators such as RSI can stay in a “overbought” status for 1-2 weeks before finally resetting. So I would conclude that this definitely is not a level to initiate any long positions but to wait for a pullback for a better price. We will continue to hold our reminder positions, but we are planning on adding more positions on it once we see a pullback with a confirmation of a bounce.
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2.23.15 Monday
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[11:15am CT] Closed 50% Remaining @ $131.82
Apple continues to move higher strongly today, and we’ve decided closed another 50% of our remaining-positions at $131.82 earlier this morning; now we are only holding marginal position on it. I do think we are getting into a “very extended” level with $140ish level as 161.8% Fib. Expansion resistance with most oscillators at “overbought” status. I think it is possible that the stock can continue to grind higher even though it is at a “overbought” status, but I do think the odds are stacking up against the buyers in the minor and intermediate term. I definitely don’t think this is a level to buy nor short, but this is a level to take profits. When stock moves up this fast and this quickly, lot of times the pullback can be sudden and violent. We are very comfortable taking most of our profits at this level, and seat back and watch what is to come in the remainder of this week.
50 thoughts on “JOURNAL: I’m Long on AAPL”
Always great to hear from you Kay! It was definitely
rewarding to be buying the lows in both of those dips. It was of course
frustrating buying the first one and then watch it roll over…but
overall I was saving more powder to buy in the event that we get a
second retest and the conditions in which it made that new monthly low
was on higher RSI. So we got a little bullish divergence, breach of
previous low on higher RSI…with a name like AAPL I’ll take it!
Bought
the April 120 C in both areas and some other March spreads, like the
Mar 125/130 for $.47….just as booster if this does take off.Thanks for sharing your analysis. Well respected
Always enjoy your analysis, you recognize the pros and cons of the trade gain or loss you make perfect trades based on entry/exit, execution and preparation.
Happy Trading
A crazy volatile week it’s been for apple! Any thoughts on where we go from here Kim and others? Is the oil price decline causing big hedge funds to unwind and sell their profitable apple trades? Are we going to see a rally start Monday after the Jan monthly options expiration? Would love to hear your thoughts. Good Luck!
appletrader007 hello, please check the latest video on the market https://2tradersclub.com/2015/01/14/video-mid-week-update-with-kay-kim-10/ i think its still early to assume that the big hedge funds are unwinding though we do have intermediate term cautionary signals but obviously we are still in a uptrend in the primary. We’ve seen this so many times in the past on the S&P 500, where we get shakeouts and it looks like the whole market is going to get into a major correctional phase and then it just rush back up… so I think more data is needed before concluding. AAPL is in trouble in the miner/intermediate term..100SMA level is to watch. I will post an update over the weekend~
2kaykim appletrader007 Just entered a small amount of calls off of that 100ma this morning. Good luck guys!
Kay, can we do an analysis on AAPL from the Weekly time frame. I remember when you were calling the top on AAPL back in 2012 you nailed it because you highlighted several warning signals that were emerging on the weekly time frame. Can we apply a similar analysis here that might be of some value? For example, I do notice that both MACD & Stochastics on the weekly chart are still in bearish crossovers, which might make it rather difficult for AAPL to break new highs anytime soon with those indicators showing a heavy weight pulling more downwards pressure on the stock.
Would love if you presented a case for how this all looks relative to the weekly time frame. You’re good at doing these
I will be hosting my bi-weekly LIVE event tomorrow right after market close, I’ll cover aapl and answer your question looking at the weekly sentiment. You can sign up to attend the event or look for the recording tomorrow night.
Will it be OK to keep this during earning which is on next Tuesday? Risky as it has been proved in the past:-)
The LK yea no one knows the answer to that question on ER. its really 50/50 chance how its going to play out..
Looks like AAPL has done a great job in ER.:-) it was scary a bit today as it went down $4.
The LK yea looks good. If we can able to stay above $114 next few days, I think we can continue higher
2kaykim The LK Well above $114 today! Those iPhone sales numbers were insane, even for Apple. They have to price it in. We could see the run up for weeks like we saw right before it hit $120 last time. Went up for a whole month after Oct earnings. I just don’t know where it will pause?
K, any idea? Maybe $140? 4150? We still have the Apple watch release in April too. Still holding all my option calls, will add on any down days. Last time there were days that Apple was down over $2 on profit taking as it was headed to $120. We could see the same effect. Those can be really quick moves so I will just put in limit orders each day before the market opens to see if I can catch a falling fish in the net.
2kaykim The LK I will only add if I see a breakout above $120. It’s a wait-and-see for now.
Zex_M19 2kaykim The LK Our next target is $127-$130~ looks strong today~ I will update my post tonight
$FLEX heading for a breakout; previous h&s and cup n handle breaks on 5year chart heading for a new breakout and nice slow uptrend since bottoming in 2008 check it out
Dorahc22 yea it actually looks like massive Inverted H&S to me (june 2014 – today)
Breaking out of $120. Added more today.
Zex_M19 yes looks like breaking out of the Bull Pennant. Must close strong today for continuation
2kaykim Zex_M19 Either we are seeing a double top or a h&s reversal. All depends on which side of $120 Apple decides to trade in the next few days. For the overall market (indexes), are we in a trading range? Charts are all over the place. Up, down, up, down, rinse and repeat. LOL!
Zex_M19 2kaykim yea aapl didn’t close strong today.. new few days are key. https://2tradersclub.com/2015/02/04/video-live-mid-week-update-with-kay-kim-3/ covered AAPL here
your analysis again proved correct as usual:-)
The LK yea nice close last two days~
Zex_M19 2kaykim The LK now that we are above 120 I am looking for a pullback to get some more.
Took some off this morning had a great run, didn’t want to be greedy. Near that 128 level. Will wait for better opportunity.
Well, AAPL blew past 130. K, any idea where the next top is?
Zex_M19 just updated the post.. $140ish is 161.8% fib. expansion level. Also all oscillators are at a “overbought” status with daily-MACD printing all time high reading. It might be possible for AAPL to continue higher but when the sellers come, it could be abrupt and violent. I’m comfortable with taking profits at this level and seat back and watch.
Where do you think we go from here given apple watch is out? Great call on taking profits, I wish I read your review sooner:-)
appletrader007 we lost 10/20EMAs so im thinking $120-$199 area is to watch as a possible support. daily-50EMA is at $121ish level as welll also could be a support
Looks like $AAPL is forming a potential bear flag on the daily chart…to be resolved on Wednesday, when FOMC meets? Plus even though it is an up day to day, the volume is below average. If this is indeed a bear flag, are you thinking that 119-120 is the target? I watched your video last week (very informative, as always!) and that’s the range you indicated where you might watch to enter back (provided it bounces from 119-120, of course).
keizer_soze yes if bear flag, $119-$120 is the target. if the market continues to move higher this week, I think AAPL will grind higher
2kaykim keizer_soze based on today’s action, do you still think 119-120 is going to be reached. I think the bear flag has been invalidated. $AAPL now above 10 EMA. I want to get in long, but don’t want to chase it at this point. I’m watching $AAPL on the hourly chart, and it seems high there – I’d like to wait for it to drop a little bit on the hourly (or 30 min), to get a better entry. Is waiting for an intraday pullback to go long a good way to go here? Tomorrow is FOMC minutes – the possible volatility might provide enough of a pullback for a good long entry. What do you think?
keizer_soze if the market continues higher, we may not get to 119-120. im watching but not sure when ill go long yet..
keizer_soze 2kaykim only thing about waiting on a pullback is that we may never get that pullback.. I dont ever watch hourly or 30mins for an entry so I couldn’t tell ya
2kaykim keizer_soze yeah, i totally get that – about never getting a pullback, and sitting on my hands because i don’t want to chase it…and then i get that feeling that i know $AAPL is trending up, and i’m not in the trade!
but at the same time, i feel that if i got in now, it may come down during the day at some point, and then i think, “oh if i just waited, instead of paying $x.xx for that option, i could have paid less!”
that just drives me nuts…so what do you do, just bite the bullet and jump in at any point, knowing that $AAPL has some room to run?
keizer_soze
keizer_soze 2kaykim
Kizer if I can suggest a strategy here that will help minimize the
anxiety of not being involved. And it’s a strategy to make sure that
you’re positioned against both upside risk & downside risk…. such
so that you can capitalize on the upside of AAPL potentially going full
retard north while at the same time granting you a lot of flexibility
with being hedged against the possibility of a pullback. I’m talking
about a vertical call spread that’s conservatively ranged to help you
catch the risk of the next leg up in a stock.
So the current scenario we’re in is something like this →
You
want to buy AAPL but it’s in the middle range of RSI and not
attractively screaming oversold on the primary indicators like RSI,
MACD, Stochastics, etc. And in the middle range of it’s relative PE in
the quarter….Also from peak to trough this quarter it actually did
pull back about 9% already. Compared to the correction last quarter
from 119.75 to a low of 104.63 which was a 12% pullback from peak to
trough. So let’s not get to greedy and wait for the market to give us a
12% pullback this quarter. Maybe 9% is good enough for now…..so what
to enter imo would be a Jan 16 vertical call spread.
Pick
a conservative, reasonable target based on where AAPL has been and
where the technical & fundamental projection is going. Do you think
AAPL will be above $140 a share by January 2016.
I
can’t imagine anything less even a bearish climate. Unless we’re in
2009 financial crisis type period when it traded at 10.39 PE, compared
to the PE low of the AAPL 2012 crash when it traded as low as a
9.5PE…you can expect that the market will probably catch a bid on AAPL
no lower than a 9PE lets say…I think that’s very reasonable in the
most dire of scenarios. So you track the EPS growth trajectory and then
apply a low PE to that bearish scenario and then got long on a call
spread that bets on that range in a worst case scenario. I came up with
140 as a bearish scenario for AAPL in 2016.
So I have
been buying the Jan 16 130-140 call spread at a cost basis of $3.28 for
those contracts. Buying the 130 calls and selling short the 140 calls
against your long position. This is a spread and in my experience it’s
what I prefer to position with when you’re in the middle range. The
maximum value is $10 if AAPL closes at or above $140 by Jan 16. Your
break even on this spread is AAPL at $133.28 you don’t lose a solitary
dime. AAPL at 140 or higher would yield a +204% return. If AAPL goes to
180 you only make $10 but that’s still a 204% return.
In
many ways, call spreads are superior to call options …but that does
depend on the situation. Admittedly calls are more attractive when you
want to capture directional volatility when it moves in that
direction. And with DIM Leaps you preserve a lot of premium that is
otherwise lost via theta on OTM calls. But Spreads can really afford
the stock time to dick around and consolidate without much loss to the
premium paid.
Again, there are merits to calls …a time and place for buying bare
calls…and in my experience… there is a time & place were call
spreads can be more advantageous than bare calls, in many instances even
greater returns. Calls really get interesting however when things
move fast in your direction. Whereas spreads take more time to mature
as you approach expiration.
What I did, of my AAPL
allocation of cash…i put some money to work on a spread now and will
wait for a more attractive or ultimate technical low to soak up the bare
calls. So I will definitely buy both. Right now, I agree that this is
not the place to buy calls. But an argument can be made ^^ for getting
positioned with a conservative call spread.
Right now
the AAPL Jan 130-140 call spread trades at $3.65 which is a +173% return
if AAPL trades at or above 140. It doesn’t matter if aapl goes to
180…you will only make $10.
Hope that helps.
::Mike
keizer_soze right.. that’s why i talked about (on the last LIVE Webinar) trying to figure out minor-term swings will give you urge to pull your hair out lol That’s why I hate day trading.
Sometimes setup isn’t there for you to take and sometimes you just have to let it go. When you focus too much on one stock can result in devastation of FOMO (fear of missing out).
I work with 10-20 different setups so we’ve been focusing on other setups as $AAPL hasn’t been giving us good level to enter..
Hope it helps. Feel free to come out to tonight’s LIVE Mid-Week Update (https://2tradersclub.com/free2015/) and ask me more about it…
LionThyTrade keizer_soze 2kaykim your call spread is a net debit, could you do the same but with bull put spread? when i first saw your example, i thought “how will you make money if the underlying closes above your call spread” but then i realized that you’re buying the spread as a net debit. with the bull put spread, you still want $AAPL above $140 but you start out with a credit. what are the pros and cons of either method?
2kaykim keizer_soze if you position trade with options, how far out do you choose them, to prevent time from eating away at the premium (theta), while waiting for possible targets to be reached?
you mentioned that sometimes you hold positions for months.
Do you choose options that expire 6, 7 months from now (or longer), or do you choose a shorter time frame and just rollover those options to a further date at a certain point (maybe during a short term high for the underlying), taking into account increasing theta as expiration date nears?
keizer_soze 2kaykim I get this question alot. I always use deep In The Money LEAPS. So my expiration month will be 1 year out with strike price that is DEEP IN THE MONEY. These are very expensive options and last thing I am worrying about is THETA. Most people lose money on options because they are always choking on the time decay because they buy cheap out of the money options with only few months out.
I hold things 6 months upto a year. Within that time frame, I would either add and close some positions.
Looks like apple stalling here. i wouldn’t be surprised to see it re-test that 120ish level. I would love it if it would hit the 100 sma again. That is such a strong support. strange that it breaks that level for a day and then comes back.
Zex_M19 yea minor-term consolidation last several days… I think $129 resistance to break for higher or $125 support to break for lower to daily-50EMA or possibly even 100SMA daily
With todays action, it looks like $AAPL is breaking out of its recent consolidation/semi-directionless action to break higher – does this mean the trend is now to go higher?
keizer_soze yea looking good as of now.. if AAPL can close strong today, it must break well above $129-$130 for a full confirmation
2kaykim keizer_soze Kay I know you don’t trade on an intraday basis, but I’d like to know if the concepts you use can be applied to intraday charts (5-, 15-, 30-, hourly charts)?
keizer_soze it could but my concept will be diminished a lot on an intraday basis (it also means the probability of something playing-out will be dimished about half). Intraday is much more volatile and its going to violate many of technical levels and patterns. I know this because I tried intraday and its will be much more difficult to use my concept in intraday.
2kaykim keizer_soze are you looking at 129-130 as a possible entry?
Do you still feel that $AAPL is in no man’s land, or has it resolved its direction?
Their new watch is up for pre-order this Friday, so perhaps that or the expectation of pre-order numbers on Monday may help resolve the direction.
keizer_soze 2kaykim possibly… i think aapl is starting to find some traction to the upside as we are now holding above 10/20/50-day moving averages
2kaykim keizer_soze With the past few days’ price action, and today’s ER (and share repurchase/dividend expansion), do you think that $AAPL has effectively resolved it’s recent directionless grinding to the upside?
In your past couple of videos, you mentioned 128-130 as the area that $AAPL would have to break through for you to get back in on the long side – provided that tomorrow (or the next few days) price action shows good follow through.
In fact, $AAPL is now closed almost at the previous high ($133) and the after hours action has eclipsed that as well. Do you feel comfortable recommending going long on $AAPL now? is it ready move higher now? Any lingering concerns at this point?
keizer_soze 2kaykim right but because of the ER, I have not yet engaged on it yet.. With recent weakness, it looks like it wants to retest that prior resistance level here.. I actually covered AAPL intently on tonight’s VIDEO. https://2tradersclub.com/2015/04/29/video-live-mid-week-update-with-kay-kim-stock-market-technical-analysis-2/
2kaykim keizer_soze that monthly candle is looking pretty scary (April 2015)…looks very similar to the October 2012 monthly candle…extremely long upper wick, almost like a gravestone doji.