Apple (NASDAQ:AAPL) — On Oct. 9,
Apple opened at $638.65 and I said, “On Monday… a head-and-shoulders
breakdown, occurred following more production problems with the new
iPhone 5. Despite reduced trading volume due to Columbus Day, enough
sellers surfaced to drive the stock’s price through the neckline at $655
on a breakaway gap.
“This is a classic breakdown — it just doesn’t get any clearer than
that. However, a fall to $605 would not change the long-term direction
of the stock (which is still up) and could present a good buying
opportunity. I’ll review it when it gets there.”
Then, on Oct. 26,
I said, “Those who shorted the stock may want to take profits this
morning if it opens lower. However, the stock may head even lower with
its next target the 200-day moving average line at $587.”
On Tuesday, Apple closed at $582.55, under its 200-day moving average at $591.92, and is finding support at $570.
It is time to cover short positions. Those who shorted the stock on
our Oct. 9 sell recommendation and continued to hold the position until
now made 9% in less than a month. And those who purchased puts or
applied other options strategies could have reaped much bigger profits.
Current shareholders should continue to hold since the long-term
trend of one of the best-managed companies on the planet is bullish.
However, its price action does not yet tell us to buy Apple. If Apple
gives a clear technical signal to buy, I’ll report it here.
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