Special Report - Example Of Buy Setup on Apple (AAPL)

Special Report – Example Of Buy Setup on Apple (AAPL)

Update (3/18) to the article below about an example of a buy setup on Apple stock. Apple broke out last week confirming the buy setup and its continued uptrend from the December 2018 selloff low. Apple was down almost 40% from it’s October high. It has retraced over 32% of the selloff.

This is being provided for informational and educational purposes only.

During a conversation today (Monday, Feb. 18) I was asked about Apple (AAPL). In reviewing the AAPL chart, I saw that it had formed a bullish flag. This is a good example of a buy setup pattern. In my weekly review, I have talked about Apple before. Apple is one of the largest of technology companies. Because of its large capitalization, it is a major holding/investment in technology indexes and investment funds.

Below is a daily chart of Apple. I highlighted the bullish flag pattern over the last two weeks. Noticeable is the drop in volume is associated with this pattern. You can see the decline in the 30-day moving average in the volume panel. Apple formed a similar pattern in January. On January 30th Apple gapped up on significant volume. Can it do it again? The tight pattern is indicating Apple is getting to break and the direction is likely up.

The chart has other positive technical signals. The focus of this report is to illustrate a bullish flag pattern.

How would you trade this kind of pattern?

1. Go long (purchase) Apple on a breakout above 175 and with high volume. Would like to see volume greater than 40 million, preferably close to 60 million as in January breakout. An OPS (open protective stop) around 163.5. Risk (R) is about $13 / share.  Short term target is a run to 185 and then possibly higher. This could be used as a leg into a longer-term position in Apple.

2. Buy call option. Maybe June expiration with a strike price of 190.  

Please Note: The above is not a trade recommendation but is provided as an information and educational example of how to identify a bullish flag and possible trades.

For those familiar with Mark Boucher, Investment Research Associates. Menlo Park CA, he calls this a “cheat” pattern. I did statistical analysis on this type of pattern in the late 70s. Yes, it could be identified.  But you do need computing power and good data sources.

Posted in Special Reports.