The Common Sense Approach to Swing Trading Apple: A Measured Move

One of my favorite swing trade setups is the earnings breakout.  I know, we have established that in post after post.  What you guys really want to know is how does The Market Speculator plan to trade Apple!

I've got your back fellow swing traders.  Trading Apple, and making a profit from it, is like a badge of honor.  Call your significant other up and tell them you traded Regular Therapeutics, and they will fall asleep before you even get to the profit talk.  But Apple, now everybody wants to hear about an Apple trade.

Any time I look to make a swing trade, I search for a stock with a catalyst.  AAPL has that, blowing the roof off earnings two days ago and gapping up on heavy volume.

Price is currently at $118.90, about a dollar away from the all time high.  That is the key level.  The last time AAPL broke out from an old high, back in mid-October, the stock went on a 15 point run in just under a month and a half.

History tends to repeat itself and I would not be surprised to see a similar run once AAPL clears the recent high.  The $120 level is the buypoint.  This entry level provides low risk and high reward, which is the most important of our 23 laws of trading.

So there you have it.  The common sense approach to trading Apple.

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My AAPL Stop

I've been asked by a few people what my thoughts are on my AAPL short. Of course, I wish I had covered when I had a 5 point gain. I entered short at $176.08 and it is currently at $179. My stop is set at $181.

Chart: APPL

Earlier today, I mentioned that I felt there was a good chance AAPL would hold it's rebound from the lows of the day and print a long tail at the close. Sure enough, the stock closed near it's high and looks ready for another leg higher, assuming we get confirmation tomorrow. If the stock closes above today's high, I may go long again. However, if the stock does not confirm today's close, the bullish implications of the close will be nullified, a hanging man could print, and we could see a top form.

Today's Trade: AAPL and ADM

I bought 200 shares of AAPL at $100.25. I went over the chart on Friday.

ADM (Archer Daniels Midland Co.) reports earnings tomorrow. I will likely place a buystop at $39.75-40.10, depending on how the stock looks at the close today. If the stock clears this level (which is an intermediate term high and about a point away from where the stock is now), it will mean traders liked earnings and this level will probably become support.

How would you play AAPL

As most of you know (and if you don't, and you are a trader, you are slacking) Apple broke out to knew highs on significant volume after earnings. The question now is, how do we play this brekaout?

The stock was over $100 in after hours when it reported Wednesday night, but failed to hold this major round number Thursday *and* closed at the day's lows. These are not good signs. However, Friday the stock held gap support, which is is a positive for bulls. Breakouts to highs off of a cup and handle formation (which AAPL did) can lead to powerful upswings, which is another positive for this stock.

I might be willing to take a small nibble under $100, but I won't increase position size until we see some more clear signs of strength. If the stock can not hold support, I would expect it to fall back to the 50 day moving average and may initiate a short position.

Today's Trades: HES, VDSI and AAPL

I sold 300 shares of HES at $57.55 (entry at $55.91) for a $492 gain (+2.9%).

I bought 200 shares AAPL at $$91.05. I had been looking to see how AAPL would handle a pullback to the peak of the double bottom formation it recently broke out from. The hammer that printed today is a strong sign that the stock will bounce here. I bought on the move up after touching the resistance line.


I bought 500 shares of VDSI at $17.63. During it's uptrend, the stock has rewarded pullback entries, especially on tests of the 50 day moving average. Yesterday's long tailed hammer looks to have been another successful test. Also note that stochastics are turning up and volume shows increased accumulation since the February breakout. These are all strong momentum signs.



I am still holding TZOO, QID and GROW.

Trades and Vanity Performance Stats

I sold 1000 shares of QID at an average price of $53.86 (entry at $55.50) for a $1640 loss (-2.9%).

I covered 200 shares of AAPL at $92.05 (short at $90.10) for a $395 loss (-2.1%).

I covered 500 shares of STLD at $41.08 (short at $39.08) for a $1000 loss (-5.1%).

I sold 200 shares of VLO at $61.87 (entry at $60.24) for a $326 gain (+2.7%).

I bought 500 shares of CELG at $53.24.

I bought 1000 shares of VDSI at $17.67.

I bought 1000 shares of SMSI at $15.96.

I hope to detail the three current trades tomorrow with charts.

When I got home I was feeling depressed about the today's losses. One of my trading buddies helped put things in perspective by telling me to take a look at all of the trades I had made leading up to today. So I did :) I've compiled some vanity stats to help pick me up.

Since the February 27 sell off, I have made 24 trades (excluding the three trades I made today that I am still holding). Here is how I did:

• Win Rate: 71% (17/24)
• Total Gains: $13,962
• Average Gain: $821
• 
  
• Loss Rate: 29% (7/24)
• Total Losses: $4,029
• Average Loss: $575
• 
  
• Total Gross Profits: $9,933
• Profit After Commissions: $9,597

In 23 days, I made $9,597 as a part-time trader. Meanwhile, I made $5600 as a full-time worker. Trading Rocks!

Okay, I feel better now. Feel free to curse and throw tomatoes at the screen in disgust over my vane behavior.

To review all of my trades, go to the "Trade" label below.

Trade Updates: QID, VLO, HAL, LEH, STLD, AAPL

I was stopped out of my 350 share position of HAL at $30.44 for a $388 loss (-3.7%).

I sold 350 shares LEH at $72.71 for a $231 gain (.9%). The total gain for the 700 share position was $696 (+1.4%). I was hoping for a bigger gain, and decided to bail on the trade because I think the bounce might be over.

I bought 500 shares of QID at $54.46. I've been waiting for QID to near support. Let's see if it holds.

Along with the QID position above, I am also long 200 shares of VLO, 500 more shares of QID, short 200 shares AAPL and short 500 shares STLD.

Trade Update: QID, VLO, AAPL, SSRI, STLD

I sold 1000 shares of QID at $57.21 (entry at an average price of $55.55) for a $1660 gain (+3.0%).

I covered 500 shares of SSRI at $29.79 (entry at $32.24) for a $1225 gain (+8.1%).

Yesterday I went short 500 shares STLD at $39.08.

I am still long 200 shares VLO and short 200 shares of AAPL.

Today's bounce doesn't look like it will hold. I plan to establish more short positions on strength and buy more QID. As I stated before, I'll keep shorting strength and covering weakness until this simple strategy stops working.

Sorry for the late and sparse updates. I've been swamped both at home and work the past few days. I hope to post a ton of charts in the coming days.

Trades: AAPL and VLO

Today I shorted 200 shares of AAPL at $90.10. Sunday night's post explains the setup.

Yesterday I bought 400 shares of VLO at $60.24. I sold 200 shares today at $61.29 for a $210 gain (+1.7%), and am holding on to the remaining 200 shares. I'll post a chart later today.

I am looking to buy oil related on weakness and possibly short brokers such as GS and LEH.

New High Failure Trade and AAPL

One of my favorite short plays is the "new high failure" trade. There are three elements to this trade:

1) That stock makes a new high
2) RSI peaks at a lower level than the previous high
3) Take a short position if and only if the stock dip below the previous high

The recent failure of AAPL is a good example of this setup. The stock broke out to new highs in January. Many breakout traders saw this as a sign to jump on the Apple bandwagon. However, the fact that RSI peaked at a lower level than the November high was a warning sign. While not a signal to short, it was a warning that the stock should go on the "new high failure" watchlist. The optimal entry was few days later, when th stock gapped down below the old highs.


With so many stocks way below old highs, there are not many "new high failure" plays setting up right now. However, there are a number of stocks bouncing up to the old high resistance level. I will be watching this level for short entries. Maybe we can call this a "double" or "bounce" failure. For example, AAPL is inching up to the old high level on declining volume. If the stock fails at this level, which is likely, we could see another leg down.