Fan Yang
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AAPL - Anticipating a Bump Before Further Correction

I think the equities market is still in the middle of a correction. The stock indices like S&P500 have rebounded five days in a row. Taking a look at Apple (AAPL), we can see that it has found support at 108 again as did in early September. This provides a base for a bullish attempt.

AAPL Daily Chart 10/5


(click to enlarge) 

Even if AAPL is bearish in the medium-term after the 2015 triple top, we can see some upside risk in the short to medium-term towards the 116-117 highs, up to the 120-122 area, and more aggressively up to the 124.00 handle.

I think it might be prudent to get on a short-term long attempt, but limit the expectation to 116.50 first, and at most 120. If price does get to 120 and stalls in the 120-122 area, we might then want to consider switching back to a bearish mode, given that price is not gaining i volatility as it rallies, and the RSI is still mostly under 60 in the daily chart.

Given the current reaction at 108, I would like to buy if price drops back near it, ie. 108.20. It might help to drop down to the 1H chart to monitor this support area. I am putting a stop around 106.60, with a couple of targets at 116 and 120. This is a short-term bullish play with anticipation that the prevailing medium mode is still bearish. A break above 112 will be a key event for this bullish outlook, its just that waiting for that breakout might put you in a trade with bad reward to risk even though the probability of a successful buy increases above 112. There's a trade off there, and you need a bit of risk appetite to pull a buy around 108, but I think the reward to risk is decent.