It has been nearly two weeks since Apple (AAPL) reported its earnings, and AAPL stock finally seems to have found a better base to trade against.
I will walk through in the charts in a moment, but first, let’s understand this week’s news flow around the company, which does matter in so far as its effect on Apple stock.
Just yesterday, Apple CEO Tim Cook disclosed in an interview that in the days since the earnings report, the company bought back $14 billion of AAPL stock. He further added that Apple was surprised by the selloff after the earnings announcement on Jan. 28 and that the recent buybacks are a vote of confidence on their part in what they are doing at the company. The recent buying spurt was all part of Apple’s stock repurchase program worth $60 billion, so in that sense, it shouldn’t be greatly surprising.
Taking a step back, we now have not only activist investor Carl Icahn aggressively buying AAPL stock, but also Apple itself — all else being equal, that should be supportive of the stock.
The devil (as usual) is in the details … or in the case of trading and investing, in the timing.
Last Friday, I said that following the big post-earnings selloff, AAPL stock would need to consolidate some and build a better bottom before again looking better on the long side — for more than an intraday hit, at least. I also discussed the importance of the $500 area as a last support. In the meantime, both of those things have taken place, and Apple stock is beginning to break into the down-gap area from Jan. 28.
However, it’s important to remember that AAPL stock has been difficult to trade from the long side since mid-December, as every one-day rally attempt was sold into.
As such, even though Apple stock is looking better again, I am only involved a little on the long side until AAPL can again prove to be an easier trade.
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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.