AAPL – Granny Smith Or Red Delicious

 

If you didn't know anything about AAPL and someone showed you the chart below,  what would you think?  What would justify an over 50% increase in a company's share price in such a short period of time?  AAPL is not a penny stock its the largest company in the world by market capitalization.  While I can see why people are buying, I think this move is begging for a correction, but I don't think we will get one just yet.  The more people like me say a correction is coming the more the stock will continue to ramp higher.

 

From late December 2011 to today nothing drastically has changed with AAPL, just their share price.  All the good things the analysts are saying the last few days as they jointly raise their price targets 20-50% higher, is nothing new to people who follow AAPL.

I'm not against AAPL and I think with all the money the central banks are printing their is no better place to be than the best company in the world.   This mercurial rise... I don't think its going to end well.  At some point the stock is going to give out, but looking how its trading recently that time is probably not tomorrow.

AAPL during this run has two other large red candles much like today's (the green arrows on the chart if you can't spot them).  Those both signified great buying opportunities, which means AAPL keeps going higher should today's action follow the previous red candles.

This type of parabolic move will come to an end at some point and AAPL will ICRASH to the tune of 5-7% in one day.  Intra-day we saw a 2.5% drop off the $600.01 new all time high price and we know AAPL can make big moves in either direction.  For the last three months its been decidedly in the upward direction as any drop in price is just another chance for the dip buyers reload their wagons.

I suspect that will be the case for a while longer, we will have to go with the Granny Smith, although not a very tasty apple, Green means more gains for AAPL call holders and more Red for AAPL put holders.

Profile photo of uranium-pinto-beansKnown to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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