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I used to run a limited partnership, boutique hedge fund in the 90s. Retired in 2000 and moved from New York City to Toronto, Canada, got married, raised a family and basically settled down. After a few years in Toronto, my wife got tired of the city’s 8 months of cold weather and insisted that... More
  • The Impending Move In Apple... 27 comments
    Jul 26, 2013 9:29 AM | about stocks: AAPL

    Just about a year ago, Apple was the stock market's darling, making a high of $ could do no wrong...

    And then suddenly the bottom fell out and the company was written off as a relic of late Steve Jobs' days at its helm...From gloat to ignominy and hopefully gloat again as relief is finally in sight for Apple's long suffering shareholders who have watched in disbelief as their stock has nose dived to hit a low of $385...

    Earlier this week, Apple announced earnings and the most important metric, unit sales of its flagship iPhones, were a lot higher than most analysts' forecasts...The stock gapped up and is currently trading around $440.

    Looking at Apple's weekly candlestick chart, it is pretty clear that the stock has made higher lows and is getting ready to attack its first target...its 50 day simple moving average line which currently sits at $503.17...

    (click to enlarge)

    And its PnF chart is even more interesting...

    When AAPL gapped up and printed $444, it broke through its bearish resistance line sitting at $440....Readers of my blog recognize the importance of this break, having identified, and handsomely profited, from a similar pattern formation in SunPower's PnF chart not too long ago...

    (click to enlarge)

    I believe that this break of the bearish resistance line is very significant...

    Additionally, and I believe, equally as important, in the overall stock market, the S&P 500 and the Dow are making new highs...and it is only the NASDAQ that is playing the role of the party spoiler...Heck, even the Russell 2000 Index is making new, all time highs...

    In my humble opinion, this is about to change...Within the next 6-9 months, the Nasdaq Index will make a new all time high...which btw, is 5000+ points...Currently the NASDAQ sits around 3600 and needs to make a 1400+ point move to get there...

    And there is more connecting of the dots...

    Apple is the largest component of the order for the NASDAQ to reach its all time high, it needs Apple...No way in hog heaven can it get to the Promised Land without Apple...

    My humble prediction is that Apple has made its lows and has just started the inevitable pursuit of its recent $700+ other words, a $260+ move in Apple's stock price could be in the offing and it may happen sooner than many believe...after all, only with Apple's help can NASDAQ achieve Nirvana...and achieve it can count on it...

    This impending move in Apple should be explosive, and the ride, pure doozy...I am counting on it!



    P.S. I am aware that I have neglected answering a few questions posed by this blog's readers and I want to assure you all that I have every intention of responding and will do so very shortly...This post, I felt, was very important for me to get it out there for you all... :-)

    DISCLAIMER: All postings made here are strictly for my personal record keeping and in no way, shape or form, am I even remotely suggesting others to follow my Buy and Sell moves. Trading options is definitely not for the faint of heart as one's portfolio can move up, or down, anywhere between 10%-30% during a single trading day. Feel free to follow my progress here, but PLEASE do not follow my moves. However, if, in spite of all my exhortations, should you decide to do so, be advised that you, and ONLY YOU will be responsible for any losses that you may suffer...In other words, the onus is strictly on you. On the other hand, if the move(s) result in a profit for you, I am open to discussing a split. ;-)

    Disclosure: I am long AAPL, CY, SCTY, SPWR, STP, SUNE, TSLA.

    Themes: Options Stocks: AAPL
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Comments (27)
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  • Hello KP,
    Thanks for the post. I agree with you. However, what time frame are you looking at to achieve this target of $500? The relative strength is low at present & the stock isn't outperforming the market. If your analysis is correct then I think the new product announcement (expected sometime in Sept) should boost the stock way beyond $500+. I'm trying to first time play with options instead of buying a share. All my cash is in SUNE & SPWR. At $440 level instead of buying 5-10 shares (that is what I can afford right now) of AAPL, I want to try my first options trade. Hence would like to know which strike price option to buy. I think $500 strike price with Jan/Apr 2014 call option is safe instead of $550/$600 strike price for first timer like me? Any suggestions?
    29 Jul 2013, 03:15 AM Reply Like
  • Author’s reply » As I mentioned in my post, I expect NASDAQ to print a new all time high within the next 6-9 months, and possibly even sooner...My suggestion would be to buy just slightly outside the money options, say $450=$460 and next January or even April time frame should be quite profitable...good luck on your first option
    29 Jul 2013, 09:40 AM Reply Like
  • I also dipped my toe into some options today... thank you KP. I wish I had put in the time to understand PnF charts and options earlier.
    29 Jul 2013, 04:32 PM Reply Like
  • Hey Andy, you are not alone. I like pnf charts. Candlestick is not my cup of tea. I was scared to invest earlier due to lack of technical analysis. However, now with the pnf method, I feel confident. Lets see, only time will tell :-) 2 more days for SPWR earnings.
    29 Jul 2013, 08:56 PM Reply Like
  • Hi KP, wondering if your near term projections for SPWR to hit $33 have changed (maybe take longer?) since Q3 revenue guidance is weaker than expected? EPS were outstanding and good for fy13.... Was hoping for a nice pop and then to move some $ into Apple, so far afterhours it's down though. Any insight? Thank you
    31 Jul 2013, 06:46 PM Reply Like
  • Author’s reply » Hi Spak007, The earnings were terrific and the pullback in the after hours was unwarranted and on pretty light, less than 300,000 shares, volume...My target is still $33 dollars...I don't recall saying that SPWR will hit $33 the week they announce earnings...If there is one thing, make that 2 things, I NEVER do is a) Trade short term options, and b) Buy way out of the money CALLS / PUTS...Hopefully no one who follows my blog tried to do that...I still expect SPWR to hit my $33 target within the next 30 - 45 days...and possibly sooner...the reaction that you see in after market trading is just noise and I don't pay attention to it...Tomorrow, it is quite likely that the stock may have a knee jerk reaction and pull back a buck, or even two...however, the trend is definitely up and I expect the stock to hit my target sooner rather than


    And my response to IB: Maybe, if SPWR goes down, it possibly could take SUNE down with it...However, it will all be temporary...SUNE will eventually fight back because its trend is also don't let the day to day noise take your focus away from the BIG picture...which for Solar stocks, it is up, up and more up, over the next 6 months, 1 year, 5 years and 10 years and more...LOL! kp
    31 Jul 2013, 10:26 PM Reply Like
  • Thanks KP! Appreciate your comments :-)
    1 Aug 2013, 01:38 AM Reply Like
  • Thanks, appreciate your comments as well! I figured with the numbers they posted, it was very positive.....just wanted to get confirmation from the meister! I have plenty of time on my SPWR options, I was just pleased to see your post about I have always thought it was a matter of time before it came roaring back....and am hoping SPWR will get there so I can take a bigger bite out of the Apple!
    1 Aug 2013, 02:07 AM Reply Like
  • Also, if SPWR goes down tomorrow, will SUNE go down as well? SUNE earnings next Wed, Aug 7th.
    31 Jul 2013, 08:14 PM Reply Like
  • Wanted to run this by the Options Guru. Correct me if I'm wrong kp, but this Aapl thing has in its PnF chart, some extremely encouraging figures for the bulls and this Friday in its premarket of $20 bump up, I'd observed the following:


    $452= 2 double tops
    $460=3 double tops
    $464=4 double tops
    $468=5 double tops???


    All this mixed with the fact its rising column of O's makes it the most powerful version of the 3 variations of a double top formation?
    Other questions I have is what is your perspective of a high pole / low pole warnings on a PnF? Do you view these as good spots for profit taking or wait on a 3 box reversal to buy even more, if a good stock like a tsla prints 20 X's straight?
    1 Aug 2013, 11:13 AM Reply Like
  • Author’s reply » i2w, You are indeed getting good at PnF...


    Not sure what you mean by "2 double tops" and "3 double tops"...etc., but you are correct in your observation that when Apple's stock prints $452, $460, $464 and $468, it will end up breaking a double top at each of those price points...all very bullish. And mix that with the chart's rising column of Os, we are looking at an explosive move in the making...


    As for High pole / low pole warning, I watch that very carefully and will usually sell out my position and let the stock take a breather, let its RSI come down from an over bought level, consolidate and then break a double top before getting back on the train ride for the next leg up...BTW, great
    2 Aug 2013, 12:56 AM Reply Like
  • Hi Karim--


    What do you think about SPY? We just had the triple top breakout on August 1st.
    4 Aug 2013, 09:49 PM Reply Like
  • Author’s reply » As you know, my prediction is for the NASDAQ to make a new all time high in the next 6-9 months...It cannot do that without the support of the S&P 500...The double top break on the SPY's PnF chart confirms the fact that the bull trend is alive and kicking and my prediction for the NASDAQ is still on course...LOL! kp
    6 Aug 2013, 10:28 AM Reply Like
  • Hi KP--


    Can you give us your feedback in regards to AAPL's recent 3box reversal?
    Again, me and the rest of the folks here on your blog REALLY appreciate and value you posting your comments here amid your busy schedule.


    9 Aug 2013, 11:49 PM Reply Like
  • Hi Mkarakum, I was thinking about the same question right this minute. :-)
    10 Aug 2013, 03:11 AM Reply Like
  • Author’s reply » Good read...


    Yes, the 3-box reversal, on below average volume, looks good...however, it would look even better if Apple were to print $448 and thus make a 5-Box reversal...That would be my ideal scenario...I hope it will continue to go down for another 2 days as this will help bring the stock's RSI to come down from nose-bleed, overbought territory...Will it do that? I am not sure, but if it does, I will be adding to my Apple CALL position with both hands...The recent pullback is extremely healthy for the stock to climb above $510 in the next few weeks...Apple stock is going only one way:
    12 Aug 2013, 03:51 AM Reply Like
  • Thank you for your feedback!. We are forming a double top break out pattern today due to a new iphone release report. Do you think we will break that top and test 480 before we test down? What RSI levels' do you consider taking money off the table?
    12 Aug 2013, 03:51 PM Reply Like
  • It seems like the general consensus is downward in the very short term 4-6 weeks to test the 10 week moving average, 1650 before it makes all time highs later in the fall. I would love to know what your thoughts about my analysis.
    12 Aug 2013, 03:54 PM Reply Like
  • What happens on Sept 10th after Apple's announcement? If the street doesn't like same size iphone 5 & there is no new category such as iwatch or itv or no larger screen iphone news then the stock might go down. However, till then I agree with speculation it might cross $500. How do we plan for this scenario?
    12 Aug 2013, 04:30 PM Reply Like
  • Wow I've been shocked by the SPWR selloff today, especially after such good news. Fortunate to be in a position to take advantage.
    1 Aug 2013, 02:29 PM Reply Like
  • Ouch, KP I guess this is one of those 30% swings in the portfolio you said could happen.....unfortunately it is a swing down this time and in my case 35%! And we may not be done yet. : (
    1 Aug 2013, 07:39 PM Reply Like
  • KP, You rock again! AAPL is flying high. As per the pnf chart, it has reached the 486 price objective. Now what is the new price target, 550?
    13 Aug 2013, 02:49 PM Reply Like
  • Carl Ican announced his position in Apple so the shares jumped. But as usual our Guru KP has seen it way before :) Way to go Karim!!
    13 Aug 2013, 03:23 PM Reply Like
  • My first options trade & I see GREEN in my portfolio. Hope it continues the uptrend There may be 3 box reversal when people lock in profits but as our Guru says, stay long..... By the way I just ordered Mac book Air......& waiting for iphone 5S. :-)
    13 Aug 2013, 04:29 PM Reply Like
  • Hi KP,


    Yes what a great and well timed call !!! I second Mkarakum, do you take some profit on your positions when the RSI flies high or do you wait until the stock reach your set price target?


    Thank you indeed.
    13 Aug 2013, 07:23 PM Reply Like
  • Vow kp,


    This thing took off like a rocket yesterday with Mr. Icahn's stake, after the 3 box reversal. As you mentioned the overheated RSI, that is at an extremely overbought level @ 78.91, although its hit six days with higher RSI within the last 6 months, @ above 80, for week of May 7-May 13th and July 18th, respectively. Interestingly enough, the RSI movement seems to collaborate very closely with Apple's Price movement. So, since logic probably dictates an evident pullback should take place due to RSI analysis, the P&F analysis shows 10 boxes of X's with place for a few more X's easily, and at the time of this post Apple's high so far has been $499.93. So all that leads me to the inevitable question, that when P&F analysis shows a double top breakout and RSI shows an immediate anticipation of consolidation, which one wins out, or must both signals align for a move in a particular direction?


    Another question I had was regards to Solar City. What is your opinion on it. I know you had doubled your position at the $41 level, and it indeed did go up to $45, but currently its broken 2 double bottoms recently with P&F showing price objective of $26 currently, from $58 just a couple weeks back. Does that make you short term negative long term optimistic or do you have a different analysis on it altogether? Sorry about the long post, lol, and I'm eagerly awaiting the Option Guru's analysis on contradictory signals.
    14 Aug 2013, 12:06 PM Reply Like
  • Author’s reply » Good guestions...When the RSI is in nose bleed territory, as it is now, the chances of the stock taking a breather is high...The next PnF resistance is only $3 away...So I think it will fill that box with an X and may even shoot up $3-$4, but should not be able to break that Double Top without first coming down, hopefully for another 3-Box reversal...That should also help bring down the RSI to somewhat acceptable level(s)...


    However, don't try to play the swings but rather use the pull backs as opportunities to add to your position because AAPL's overall trend is up...


    And within the next 2 weeks, another important technical break is coming up in AAPL, which should propel the stock higher to the $550 level...Will write a blog post on that subject soon...




    On SCTY, I sold my CALLS at a nice profit a few days before their earnings announcement...Didn't have much confidence...Was just playing the stock's technical breaks for play money...Unfortunately I also sold out of my Tesla options before their earnings because its chart looked scary...and of course left substantial monies on the table...however, overall, I did quite well in TSLA options, so don't have much regret...


    My serious bets are on SPWR and AAPL...I have a lot of confidence in these 2 stocks...SPWR's stock is in a consolidation phase which may last another 4+ weeks before it breaks out and makes a new 52 week high...




    P.S. Please understand that these are my observations that I am sharing with you and others with no guarantees that events will play out the way I expect... :-) kp
    17 Aug 2013, 11:39 PM Reply Like
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