Apple Inc. ($AAPL) last reported earnings on January 26. The stock initially reacted negatively to the earnings report, closing down 6.5 percent during the following trading day (1/27). The stock had been sold aggressively over the prior several months, falling 30 percent from its 2015 highs, which you do not see too often in such a large cap name like Apple.
Following the earnings report, the stock started going sideways in a range with support at $93-$94 (see chart below), all while the broader market was being abnormally volatile. I thought getting long into that $93-$94 support area represented a relatively low risk setup with defined risk on the long side. There were two primary factors that led me to favor getting long into support: 1) In February, the market – specifically $SPY – had put it what appeared to be a short-term bottom after retesting the $181 lows from January (we know what happened next of course); 2) With its huge market cap (nearly $1 trillion), institutions will often look to bid up stocks when they come off their highs by a large amount (e.g., 20-40 percent) as they look to buy favorable names at a significantly “cheaper” price. With the stock being 30 percent off its highs at the time, I thought there was possibility that institutions would look to start accumulating Apple stock at these lower levels.
The Trade (long):
$AAPL was the only “technical play” from morning notes. Strong move off lows. #Intraday
— Jake Huska (@MarketPicker) Feb. 24 at 03:19 PM
As you can see from my tweet back on February 24, I was carefully watching Apple at its daily support, as it was the only “technical play” from my morning notes for that day. I had gotten long into $93.50 support outline in my morning notes and added intraday on strength.
@chicagosean I was being somewhat facetious. Although I have the most swing long positions I’ve had this year fwiw.
— Jake Huska (@MarketPicker) Feb. 25 at 04:11 PM
— Jake Huska (@MarketPicker) Feb. 26 at 02:29 PM
The stock closed strong that day and had follow through over the following days. I scaled out of my position on the way up to book some of my open profits and take risk off the table. I eventually got down to my “core” swing long, which I planned to swing trade.
— Jake Huska (@MarketPicker) Mar. 1 at 02:23 PM
Here’s a visual of that re: $AAPL
— Jake Huska (@MarketPicker) Mar. 1 at 02:25 PM
— Jake Huska (@MarketPicker) Mar. 1 at 02:34 PM
Updated $AAPL chart…bought @ bottom blue line, sold more today into top blue line. Got down to 1/4 size.
— Jake Huska (@MarketPicker) Mar. 3 at 11:38 AM
— Jake Huska (@MarketPicker) Mar. 9 at 09:59 AM
— Jake Huska (@MarketPicker) Mar. 15 at 01:24 PM
— Jake Huska (@MarketPicker) Mar. 17 at 11:38 AM
$AAPL back near yesterday’s highs. #Intraday
— Jake Huska (@MarketPicker) Mar. 22 at 10:00 AM
— Jake Huska (@MarketPicker) Mar. 29 at 11:16 AM
$AAPL above 3/21 high. Would look to get flat rest of long a few points higher…
— Jake Huska (@MarketPicker) Mar. 29 at 01:50 PM
— Jake Huska (@MarketPicker) Mar. 30 at 08:51 AM
Close to getting flat rest of $AAPL swing long…
— Jake Huska (@MarketPicker) Mar. 30 at 10:08 AM
Got flat rest of $AAPL swing long w/ everyone else 😉
— Jake Huska (@MarketPicker) Mar. 30 at 11:10 AM
— Jake Huska (@MarketPicker) Mar. 30 at 11:30 AM
Below, I have added a chart to go along with the above tweets outlining my long trade.
The Trade (short):
After getting flat my long position on March 30 at $110, the stock continued its upward trend, trading above $112 three days later. The stock was running into some overhead technical resistance levels that also coincided with the 61.8% Fibonacci Retracement and a downward-sloping 200-day moving average (see chart above). Now while I generally use simple technical levels in my trading (i.e., support and resistance levels), there were some traders on my stream that were pointing out these technical indicators (200-day moving average and 61.8% retracement), so I knew others were looking for the stock to either pause or pull back a bit, especially given its 20 percent move off lows from January and February.
I got short this past Monday (4/4) into $112. When I tweeted out that I had gotten short on Monday, I made sure to make it clear that this was a counter-trend trade. This is an important distinction to make, as I was going to be much quicker to cover my position and take profits since there was a lower probably that the stock would just collapse. Whenever you put on a counter-trend trade, it is by definition a lower probability trade, and thus, you generally want to be quicker to book your profits when you’re in-the-money.
— Jake Huska (@MarketPicker) Apr. 4 at 01:53 PM
— Jake Huska (@MarketPicker) Apr. 5 at 08:48 AM
$AAPL held yesterday’s pre-market lows. Stop on last remaining bit of short against yesterday’s highs.
— Jake Huska (@MarketPicker) Apr. 6 at 11:24 AM
Got stopped out of last remaining bit of $AAPL short into the close fyi.
— Jake Huska (@MarketPicker) Apr. 6 at 05:07 PM
Below, I have attached three day chart to accompany the above tweets outlining my short trade from earlier this week.
As for where Apple stock may be headed next, I think a lot of traders would like to see some consolidation. The stock is currently above its 50-day moving average, which is now sloping upward. The stock closed just under its 200-day moving average again today. A few more days of base building, and I wouldn’t be surprised to see it take out this week’s highs. If/when I get back in (on the long or short side), I will be sure to share my thoughts on the stream.
Thanks for reading. Please let me know if you have any questions or comments.