Entering Long AAPL

AAPL closed above the key resistance level of $465 yesterday and made its first higher high since the downtrend began last September. This has run nearly 20% off its lows at the end of June, so some consolidation here wouldn't be a surprise. What we are seeing is a confluence of entry signals in the RS trend vs. the SP500, price above a rising 20 WMA, positive momentum, and NOW a higher high. A breakout above the $465 level also puts the Double Bottom pattern in play.

We will use the $420 level, just below the post earnings gap, as our stop on this position. The stop gives us roughly a 10% cushion should the stock pullback a bit here. A breakdown of that low @ $420 would also violate the 20 WMA and trigger our exit. Remember we will not always be right, but when we are wrong, we will know quickly and act accordingly. Always keep risk in mind when you enter a position regardless of how positively you feel about the asset in question. Always know where your trade is wrong and NEVER hold onto a losing position beyond your predetermined stop.

Here is a look at AAPL on the Weekly view:

On the Weekly view we have a Double Bottom pattern with a measured target @ $545. Price has taken out and followed through from a rising 20 WMA. The RS trend has broken out from a YTD downtrend.

Daily View

Here is a look at the daily time frame. You can see here the breakout of the congestion zone and higher highs. Also the gap caused by the better than expected earnings report (yellow box) and then the prior swing low that we will be using as our stop on the position near $420