Since my last update on Apple (AAPL) on Christmas Eve, AAPL stock has seen no great price action, and certainly no follow-through from the Dec. 23 pop that I discussed at the time.
However, before revisiting the charts of AAPL, allow me to say the following:
In all of my muses — and particularly in my now nearly weekly update on the charts of AAPL stock — it is my goal to give a fully transparent view of my thought process, walking readers through my analysis in real time. As trading goes, sometimes there are actionable trade setups, but sometimes a wait-and-see attitude is best. Furthermore, sometimes trade setups work, sometimes they don’t — that’s how trading works. The difference between a profitable trader and a losing one is how the losing trades are handled (i.e., how well one sticks to the pre-determined stop-loss levels).
On the charts of AAPL stock, the pop following the China Mobile (CHL) news from Dec. 23 has seen zero follow-through buying. In fact, all Apple stock has done is drop lower again to further consolidate and retest its July 2013 uptrend, which now also roughly coincides with AAPL’s 50 day simple moving average.
In other words, the bullish follow-through price action I foresaw on Dec. 24, on the back of the rally the previous day, has not taken place.
Closer-up on the daily chart, note that AAPL stock has now filled/retraced its entire up-gap from Dec. 23, and over the past several days, it has started to build a tight consolidation right at the 50-day moving average (yellow line). As a result, AAPL stock is now showing zero relative strength and thus no good setup to trade from the long side.
I would need to see Apple stock move above the $547 area — and thus out of the tight consolidation from the past few days — before a trade to the long side would make sense again.
Alternatively, for those looking to be really quick on their feet, should the stock decide to snap below $538, a quick short-side try toward $530 could be an opportunity.
Me? I’m sitting out on AAPL stock altogether until there’s a better setup.
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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 e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.
