There’s a long-term and a short-term trading opportunity in AAPL right now.
First and foremost, it’s important to be aware that AAPL will announce earnings after the market closes on January 29th.
AAPL’s earnings announcements are typically volatile periods, so be careful trading this stock between now and the end of January.
The two set ups in AAPL right now are as follows.
1. If a rally begins today or Monday look for it to continue into the earnings announcement on January 29th. This short-term rally gets triggered if AAPL trades over $155.50. If this trade begins, the stop is under $151.50.
This is a short-term trade and does not suggest any insight into which way AAPL will move after it announces earnings. Therefore, it should be exited before the announcement regardless of where the stock is trading.
2. The long-term trade is to anticipate that the January 3rd low is a long-term bottom. This low was created on the bearish news that APPL was lowering its revenue expectations.
From a trading perspective, the reason to bet on this being a significant low is that the it has traded higher ever since the bad news day.
From a technical perspective, the January low is sitting right on the 200-week moving average. APPL has bottomed out around this moving average in 2009, 2013 and 2016.
You can see the weekly chart below.
If you’re interested in trading this longer-term perspective, your stop on the trade should be under $130. This is about a 16% loss from the current price around $155, but the potential to ultimately get back to its highs is a 50% gain.
Long term options would be another way to play this idea.
Additionally, if the earnings announcement results in a drop in the price, as long as APPL is trading over its 200-week moving average, this level is one to trade from the bullish side long term.
Keep an eye on the weekly chart. There could be many opportunities here in the future.
Rick Nartarian, Chief Investment Officer
The American Investor Daily