I am now back to being bullish on Apple. Back in April I was bullish on Apple when it hit $385 and began to bounce back. A big key for me back then was the increase in volume, the rebound had solid volume and it kept me into my call positions. Once I started noticing the drop off in volume towards the $450-$460 level, I did mention that the continued increase might come to an end. Which it end.
Two weeks later Apple tested $420, and successfully held that level. Three weeks later Apple tested the $450 range on multiple occasions but was never able to overcome it. Once the markets topped off and began to sell. So did Apple. On Friday, Apple was trading at $389. $4 away from its 52 week low.
Well this is where Apple decided to surprise everyone. Considering that Friday the markets were mixed for a good part of the day, Apple set a bottom at $388.88 and began to rebound. In the last hour of Friday Apple hit a high at $400.27. But had to succumb to overall market sell off which pushed it down to $396.53 at the close. +0.70% for the day.
Dow Jones was down 0.76% for the day. S&P down -0.43%. Nasdaq pulled out a 0.04% gain. Either way, Apple outperformed the markets for the day.
Lets bring up the daily chart:
https://www.tradingview.com/v/TCr1XcVu/
In that chart, I was pointing out a very similar candle that we experienced in April when Apple began to make a come back. The lows, highs, wicks and closing price are nearly the same. Remember...patterns if they exist, will repeat.
RSI which helps us know if a stock is oversold or overbought is still very much oversold on the daily. It would seem that a $15 bounce back up would be healthy bounce even if it wants to continue moving lower.
It might be difficult to tell in that chart, but this is also the highest volume we have had in a green day since May 20th.
Monday will be a key day for Apple but as of right now I believe Apple will bounce over the $400 level and possibly even test $420 later this week.
Putting my money where my mouth is, I do have an open bullish position for the following week. It is a long $400/$405 Call. Next Friday's expiration. Breakeven level is somewhere in the $402 mark. Maximum gain is $405 and above.
Basically I need Apple to be trading above $405 by week's end. This position is risking $2,000. Maximum gain is $5,505. Currently the position is +$500.