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Apple Just Flashed an Extremely Rare 'Buy' Signal

Just before I started trading on the floor of the Philadelphia Stock Exchange, I spent some time at an old Philadelphia boutique investment firm. The firm was small, but handled some of Philly's wealthiest and most respected clients.

The experts at the firm were some of the best in America, and I learned a great deal from all of them. But it was our in-house technical expert, Andy, who I really bonded with.

Andy taught me the importance of charts and demonstrated just how powerful technical analysis could be. As an "options guy" who loved numbers and fundamentals, this was a bit of a stretch for me at first. I couldn't believe that some lines on a screen could dictate how a stock behaves.

Boy, was I wrong.

In the years that followed, I incorporated technical analysis into my models. To this day, I'm reminded daily just how right Andy was and just how critical the charts -- moving averages, in particular -- can be.

Major moving averages can have dramatic influences on the price of a stock. They can act as support or resistance and serve as propellants when a stock breaks above or below one.

Aside from the relationship that moving averages have on the stock itself, the relationship between the averages can create even more powerful shifts in stock trends, especially in the popular 50-day and 200-day averages.

And that's exactly what we're seeing in one of America's favorite stocks, Apple (Nasdaq: AAPL).

[More from How To Turn A Banking Dip Into Double Digit Profits]

Before I get into the technical analysis, I want to briefly address the recent headlines about a European court ruling that Apple received illegal tax benefits for 11 years and is on the hook to pay about $14.5 billion plus interest in back taxes to Ireland.

First, Apple did not break the law, nor did the company dodge taxes. It simply followed the same route that many companies doing business in the EU continue to follow. It would be similar to the U.S. government suddenly demanding that all Delaware companies pay...