i'm dan fitzpatrick at stock and optionmarketmentor.com onjanuary 28th, that's a monday. i want to go back andlook at apple ( $aapl apple inc ).i talked about apple ( $aapl apple inc ) recently in our free chart of the dayvideo, so we're going back to the well here.
aapl stock ticker, i described, if i recall correctly and i think i do, a head and shoulder pattern, you can see ithere; left shoulder a higher high, which turns out to be the head becauseit's followed by a lower high
and then finally a break of the, quote, neckline, which is just simply the line thatconnects this point and this point, just a straight line, don'tneed three points to make a trend line when we're looking at a neckline, allwe need is an extended line between two points. so the idea is, the stock breaks below$500.00, we take the same distance from the neckline
to the high, here, and we extend that fromthe neckline, wherever it's broken, to the low, and that's somewhere around $310.00,$320.00, $330.00, something like that. that is seen, among technicians, as aminimum move, that is a measured move, it's just simply the way you trade head and shoulder patterns. but this is really important becauseactually i'm long apple ( $aapl apple inc ),
even though i really want to, as i'vesaid repeatedly, short the snot out of itand it has been right to be short, it is still right to be short if you have this type of time frame. but if you're a trader you got tolook at this, we can expect, as a typical textbook headand shoulder pattern, a retracement that tests the breakout. it should test the breakout meaningbreakdown, it should test this, that had been priorsupport,
see if it's resistance, if the stockrolls over that's when you get short again. so we'lllook at the daily chart here, look at the volume, on thursday's big gap down,that was the highest volume, friday, really, really high volume as well, justnot quite as high as a previous one. today we got a reversal, a gap down alittle bit from the open, not too bad but a little bit, but actually i noticed it had beentrading pre-market,
a little bit higher. so i got long first thing this morning,by some call options and i'm going to sit there and ride thesepuppies until the stock gets up to $460-$470.00,i mean we've got a gap here, that, you know, a lot of traders say,"well that gap needs to be filled." gaps aren't always filled, check out all thegaps on amazon ( $amzn amazon.com, inc )back when it first started trading; if only those thingswould be filled. but still, we do have a power vacuum right here, we got a void inbetween these two prices, and so ifapple ( $aapl apple inc ) comes up to test this level again,
let's see what that is, the high here, $465.00. if apple ( $aapl apple inc )comes up to test $465.00 my bet is that's when you're going tosee some more selling, you're going to see some selling there. sofor another 15 points of upside i think you want to be long apple ( $aapl apple inc ).after that, you know what? i'm not to be a prognosticator, i'll leave that toother guys that are either a lot smarter or a lot less honest and i am, one of the two.
i'm just telling you this, for the next15 points or so, assuming apple ( $aapl apple inc ) does move up, i'm going to stay comfortably longas opposed to the trader pink floyd who tends to be comfortablynumb. so we're going to be long here for another 15 pointsand then we'll revisit this trade. oh,and by the way, if the stock doesn't do whatdan says it's going to do and instead trades down below today'sintraday low of $435.86, which is just slightly higher thanfriday's intraday low of $435.00. if it starts falling below$435.00, you've got to zoom out , look at
this time frame again, and realize this puppy is going a lot lower. solonger-term bias downward, short term bias upward, let's go make some money.
