Since my last update on Apple (AAPL) on October 29 — the morning after the company announced its fiscal fourth-quarter results — AAPL stock has traded mostly sideways. I discussed the stock’s steep upslope into earnings, saying that while I remain positive on the stock in the medium term, I wouldn’t recommend holding a full position of AAPL through the post-earnings tumult.
Sure enough, after opening up higher on October 29, sellers managed to push the stock to a red close, resulting in a bearish outside day on the daily chart. The stock became a classic case of “buy the rumor, sell the news” — and traders who lightened up on their long position in AAPL ahead of the earnings announcement had much less stress with their position than those who blindly held on to their stock through the uncertainty of the earnings announcement.
As a side note before looking at the charts, please be aware that activist investor Carl Icahn is still involved with the company as he tries to convince Apple CEO Tim Cook of a stock buyback plan. Resolution of this situation could well be the next market catalyst investors are looking for to push the stock higher — or lower, for that matter.
On the stock’s daily chart, its upward trend since July remains intact, with the latest consolidation phase now just about three weeks old and forming a bull flag pattern. AAPL has first support at $512, which is the post-earnings low as well as the stock’s August highs. A breakout of the bull flag formation would result on a daily close above $528.
All in all, while Apple is still trading in a constructive pattern, I don’t want to chase it higher just yet. I’m waiting for a break above $528 before adding to my long position.
Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the “Essence of Swing Trading” eBook by clicking here. At the time of publication, Berger owned Apple Inc.