Linda,
I responded to your post last night in some haste, because my daughter had just had jaw surgery, and I was quite occupied. While that post was accurate, I think this one will further clarify.
BTW, I've been thru post #16916, and I must say there is lots of soul searching by everyone about Apple's present price and short-term direction. I might also add that I hold long positions in Apple for the long-term, because I believe anything that happens downside here is very, very short-lived. This is a fabulous company with fabulous products, many of which are rarely mentioned but may add significantly to Apple's revenue. Even as I write, I see that Apple is breaking up a little.
I want to show you a couple of bigcharts charts for Apple showing the RSI and Bollinger Bands. The first is the 1-year daily, and the second is the 3-year weekly. Note the recent spikes in the RSI, especially on the weekly.
bigcharts.com
bigcharts.com
Apple almost always sells down from RSI spikes on these charts. The weekly chart shows a RSI spike near 80, which is considered overbought. Consequently, I see this as strong evidence that a retrenchment is near, and I have bet on it with put positions.
The psychological and emotional factors I mentioned constitute the art (not science) of getting a feel for the market. Sometimes the stock turns down (or up on the bottom side) while the RSI is still some distance from the 80 level; other times it goes right to the level or even through it (never by very much though). Apple has turned down on the weekly, for example, but only after attaining consistently higher RSI peaks (It seems due.).
I cannot really describe the synergy of the many factors go into determining when it is time to buy or sell, but at some point I get uncomfortable with the way Apple is moving compared to the general market. These are the points at which I usually make buy/sell decisions. I'm sure this is true of all of us, and that TA's use the same sort of technical indicators as I do to guide those 'gut feelings'.
Andrew has been posting a mixed bag of long-term bullishness and short-term bearishness with some trepidation. He suggests that the Bollinger Bands tightened may be signaling another up leg.
He may be right and the RSI on the charts may peak a little higher, but I still think the chart will follow the historical pattern of some sort of pull back. It may not be very long or very deep, but I believe it will come. I did not get the pull-back I expected yesterday, probably because of the the overall strength in technologies (the rest of the market did not seem that strong to me). I expect to have gotten spanked come Friday on the Aug 42.5 puts I bought, but I also expect to profit from the Sep 42.5 puts I bought this morning.
I hope this explanation helps explain to you how I make my decisions. I've been lucky this year with Apple. As long as it continues and as long as I can hold the chart's wave, I will keep surfing.
Sam
P.S. I must add as a post-post addendum, that I have only had significant luck with my investing in Apple since starting to lurk here on SI. I mentioned the word synergy above, but it applies in spades here. I truly believe that all of you have created a synergy of fundamental and technical information on this board that enables one to make excellent short-term and long-term investment decisions about Apple. I don't think many of us could have accomplished as much on our own. JIMO |
