Sometime ago I mention about Apple stock on my FB posts and from there, the stock went up from $117 to $133 in less than 3 weeks. Here like a magician I reveal the reason why Apple stock went up. As a practitioner of technical analysis, I primarily use charts to help me determine whether a stock is a good buy or a good bye!
Looking at the chart above, I first took notice of Apple around December 2014. From experience I know that this stock has a big chance of moving higher. It satisfies these criterias:
If you are interested do read my other post 5 Stock Market Secrets That Will Make You Money. Apple certainly satisfies these 5 stock market secrets.
As January goes by, the stock kept dropping but it formed an orderly drop. Now here's another secret I learnt which I will share with you. All I did was draw a line connecting the top of the declining stock and when the stock crosses above the line, you buy it. Its like an army has taken over a territory. Apple did gave a drop initially but after the earnings report the bears were completely eliminated when the stock gap up dramatically.
Here comes the 5th reason I believe Apple was moving higher
5. The stock had 3 times more buyers than sellers
I look into the Level 2 quotes and the combination of all buy orders and sell orders told me there were 3 times more buyers than sellers. So, supply and demand theory will tell you when there are more buyers than sellers the price will go up. And up it went.
The next thing to do was to determine target for Apple. A technical analysis principle you will learn is the measured move. It just says how far the stock had a recent bull move will show us how far the next move might be. If you look at the chart, in Oct to late Nov, the stock went up from $95 to $120. You just draw a line and then superimpose it to the current upleg. From there I get a target of around $130 which I shared with my readers in my FB posts.
With such a rapid rise to $133, market participants will be wondering whether they should still jump into Apple. Since our target is met, I have advise those who are still holding to Apple to sell some shares at $129 and $130. The rest they should hold on so that can ride the bull higher. Taking some profits off the table is a viable strategy as Apple is quite extended from here.
To set a new target and for defensive purposes, we need to do multiple time frame analysis. This is something that newbies will never do. To look at what is happening in a smaller level, I will switch to the 60 Min Chart.
The chart above shows Apple stock in its hourly chart. You can see the stock is in a bull mode even in the hourly chart. It is moving up in a upward 45 degrees. If we use the same measured move we used on the daily chart and super impose it on the current upleg we get a target of around $138. Will it go there? I do not know but odds of it happening is very high.
You can see that Apple formed a consolidation at around $128. That is short term support and any drop and close below that will be quite bad or at least a first warning sign. I would sell more remaining positions as a short term drop might happen.
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