I wrote this article in the fall and will update current price action at the end. As you know, Apple has taken a little bit of a beating and is not following the S &P at least not yet.
Well, I guess next week I will have to head to my local mall and shell out $200 to $400 for the latest I phone 5. Or maybe I could take that money and buy an option on Apple. I certainly can’t buy a share of their stock with that $400. Now that I think about it, last time I bought an I phone, their stock was the same as my purchase $400. So, I am not sure if this new I phone 5 is such a deal. When would it be a good time to buy some of that high flying stock? Let’s take a look at a Daily Chart of Apple.
I know it is hard to see but in Sept 2011 APPL was trading below $400. You seem to get some good buying opportunities when price gets close to the 200 Period Moving Average. It has really taken off with this new I phone 5 releases and broke through $700. That is almost double the price in a year!
Now that it has exploded in price and has not been back around the Moving Average since December, when would be a good time to buy? Well, let’s take a look at the S & P and see if that market can give you a hint at some chances to buy the dips.
If you overlay these two charts you will see that the S&P was below the 200 Moving Average in Sept and that it came back to the Moving Average in May and June. That would have been a great time to pick up some Apple stock or Options. The S&P came back to its moving average on 5/17 and that was also the day APPL dipped to the low of $530. Then, the S&P hit a low on 6/4 of 12500 and AAPL traded just below $550.
Unfortunately, we have the problem that the S&P has also moved away from its moving average. So, we can use Fibonacci retracement tool and draw lines from AAPL’s recent low to its new high today. I show you that in the picture below.
I would say that if AAPL gets back down to a 50% (Yellow) retracement from the low in July to the High here in September, you have a good chance to pick up some of this stock. Of course, you could just go out and buy that new I phone 5 and throw away all of your other chargers. I will say this, they know how to make money at Apple, so it is high time you profit from it too.
So, here is my Update in March 2013. Apple came off the high of 700 in September and took a major drop at the end of the year. As the chart below shows, it tried to come back in December, but stayed below the 50% retracement. So, selling it would have been best. It has some support right here and with the S & P strong, we might start to look at long trades again if it can get back above 500.
Now, take a look at the S & P during the same time frame. It has been on a tear and you have had two buying opportunities on pullbacks to the 50 Fib retracement.
So, look for chances to go long on the ES and Apple will shake it self off and start to climb with the S & P in my opinion. Use price retracements and pullbacks to get the best buying opportunity with less risk. Good Trading!