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Option Millionaires was started in February 2008 to provide traders with information about option trading. Led by three career option traders, whose pseudonyms are JimmyBob, UraniumPintoBeans, and Vantillian, they started one of the most popular option trading communities on the web. Now, Option... More
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  • Apple – Ready To Bounce In Near Term - Targets Inside 3 comments
    Oct 9, 2012 9:27 PM | about stocks: AAPL

    By Chris Diodato

    Every market technician saw it, and every technician raved about it, as Apple, the darling stock of the world, formed a bearish head and shoulders top. The breakdown began last Friday, as the market leader pierced through the bottom of the major support level at $655.

    (click to enlarge)

    Yes, the target is down at $600, but very often, this pattern will pull back, shaking out weak sellers. With bullish divergences in the RSI right now, and a very bullish candlestick pattern, it looks like it is ready to do just this.

    (click to enlarge)

    And in the daily chart, you can see the candlestick pattern, known as a hammer. This is a signal that demand has once again stepped in and has taken control in the market. It's a short term pattern with short term implications.

    (click to enlarge)

    I have the target in this chart at around $655.37. The time target would be around October 12, which conflicts with my October 23rd top prediction. Therefore, I suggest to use $655.37 as a "minimum target" for trading purposes. The second target would be at $674.62

    Now remember, these are just my thoughts for the short term. With the breakage of the head and shoulders pattern last week, the active target is $600. That's the longer term target. Here, I am just trying to forecast the fluctuations until that point.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: technical analysis, divergence, pullback, throwback Stocks: AAPL
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  •  
    Kudos on making the call. My experience in charts (I study IBD in depth) is that you can have a thesis but make your bets with an "exit" strategy and be prepared to be wrong. It is a hard lesson to learn.
    10 Oct 2012, 11:28 AM Reply Like
  •  
    Good heavens yes. I will be completely honest, for the first three years trading, the most common phrase that described my trading was "I was right but I still lost money!" Tough work. Anyway, thank you for the comment, and glad you liked the article!
    10 Oct 2012, 12:42 PM Reply Like
  •  
    One Idea I am considering on Apple:

    Sell - Jan 14 $550 Put for $63.60, use proceeds to buy a $550-$600 Jan 14 Call Spread (cost approx $27). Start to lose money at $513.40. Make approx $86 on the spread if over $600 Jan 14.
    10 Oct 2012, 12:57 PM Reply Like
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