With rumors swirling about Apple’s (AAPL) newest iPhone design set to debut later this year, traders are watching intently to gauge how the stock is responding. Checking out the charts can give you the biggest clue to the next direction for AAPL stock.
After a dip below $520 in February, AAPL stock has climbed back to level off in the $530 to $535 area, but the chart patterns indicate it could make a near-term jump in the next two to six weeks. But to tell how far, let’s look at the patterns a little more closely.
At the close of Wednesday, March 12, on the heels of a price cross of the 21-day moving average and a strong momentum signal, the Profit Scanner powered by Recognia identified two short-term bullish patterns in the daily AAPL stock chart: a triple moving average crossover of the 4-day, 9-day and 18-day MAs and a “Know Sure Thing”, known as a KST. Let’s look at both.
Moving averages are important because they are used to smooth out the volatility or “noise” in a stock’s price history, which makes it easier to discover the underlying trend. By monitoring the average price over the last several bars, the line is less erratic than if you were to plot the actual prices.
In the triple crossover method, a bullish signal is generated when a faster moving average (here, the 4-day) crosses above an intermediate moving average (the 9-day), which in turn crosses above a slower moving average (the 18-day). This tells traders the stock price is likely in an established uptrend. (Of course, the opposite is true when the 4 bar crosses below the 9 bar which in turn crosses below the 18 bar, triggering a bearish event.)
In addition to the MA crossover, the bullish KST is an oscillator that combines multiple time frames into a single measure of momentum for an equity. It can be interpreted in the same way as other smoothed oscillators but most commonly indicates bullish and bearish momentum signals as it crosses above and below its moving average respectively.
Both events happened on significant volume of more than 7.1 million shares, which adds to their validity.
The Next Target for Apple (AAPL)
The beautiful thing is that even if you don’t understand technical analysis, Profit Scanner tells you explicitly if a stock is bullish or bearish and gives you targets. Profit Scanner has identified a near-term target for AAPL stock of $601.00-$626.00 in the next two to six weeks.
A set up like this is ideal for using bullish call options trades as a far more inexpensive way to gain upside exposure to AAPL stock. While one share will cost you around $5.35, you could buy an AAPL April $560 Calls for around $440 ($4.40 a contract) which could easily double in short order if AAPL makes a short-term run. (There are several weekly options for AAPL, as well, that expire each Friday in addition to the regular monthly April call; weekly options can be a great way to take advantage of increased volatility in the stock, but just make sure you’re executing the order for the option you intended to buy.)
But be aware there is a strong resistance for AAPL stock at the $560 level, so traders may wish to take all or partial profits if the stock approaches that price and falters.
It isn’t just opportunities big-name stocks that Profit Scanner can uncover. A recent Trade of the Day recommendation in penny stock Labor Smart (LTNC) hit its target recently for a 29% gain in about a week’s time.
Profit Scanner powered by Recognia can help traders of all levels find new trading customized trading opportunities for finding the best stocks to buy or short in specific sectors, price points, timeframes and so much more. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.