Is Apple (AAPL) Overdone and Ready to Follow-Through?
Apple (AAPL) stock benefited from a surge in volume as the indices groveled near recent lows. SPY, IWM, and NDX were all lower. Still, Apple managed to consolidate in a doji pattern near 165 (+/-) for most of the morning session.
Summary
@leestar remarked about the potential morning star doji early in the morning, and kind enough to share this pattern with members in the trading room.
Apple (AAPL) Bullish?
Volume and price suggest shorts covered as volume poured in early Monday. Once price stabilized it became clear Apple was ready to move quickly as Bollinger Bands tightened.
We started a position with @leestar and alerted the room during the LIVE broadcast. We will take 1/2 off at the open then look for a fade to add.
Apple Follow-Through
As fortune would have it, Josh Brown noted that Apple was forming a “doji” during the CNBC noon hour broadcast, the so-called #Half_Time_Report. That’s precisely the catalyst that sent AAPL higher from that point into the close.
Apple (AAPL) Follow-Through
Apple is trading higher by (+1.20%) in the early session. As such, we will discuss and adjust our targets as the stock setups a follow-through day.
For now, a move above 172.50 would push price action into the KIRBY overhead. There is also a gap where price is trading this morning. Then look for resistance at 184.00 (+/-) HL at VBP. For reference, the weekly chart shows the trendline break was near 200 (+/-).
News coverage continued throughout the day. Guy Adami and Carter Worth also talked about the stock and price action during the Fast Money show late Monday evening.
“I think Apple is a better bet than the market overall” – Carter Worth
The throwback Carter mentioned is exactly what we are anticipating. Look for resistance overhead at that broken trendline going back to 2016.
Apple (AAPL) and Berkshire’s Stake
Apple accounts for the bulk of the decline. The value of Berkshire’s stake in Apple, which totaled about 258 million shares on September 30, has declined by about $15bn so far in this quarter. Buffett is a big fan of the company, whose declining share price reflects concerns about lower iPhone sales. – Barron’s
No matter what Apple does after this short-term trade, be sure to reassess as the market moves higher this morning. We will evaluate Apple’s health throughout the session today, as we remain mindful of the sell-the-rip mentality that has captivated the markets since the September peak.
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Happy Trading,
Vinny
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