If you don't trust the pattern, you better trust similar stocks like AMAT, and DEC, once they claimed better revenue/net, the stock price never returns to previously lower level until maybe a long full cycle is complete.
Phil,
I do trust the pattern, and that is precisely why I think that Apple will go lower here. Spaw must feel the same way as I do, given that he did exactly the same thing, even the same trade almost (I was in the March 20's at 1 1/8 and got out at 3 1/2 on Thursday just before the bell).
I too think Apple is in a hell of a bullish trend. I also think that no stock goes straight up. Apple clearly and almost inevitably sells off when the RSI reaches 80. You can look at the chart in my earlier post and see that. Believe me, I debated with myself for awhile before I sold the options, and I could have gotten another 1/4 point had I waited until Friday. Nevertheless, the market action on Thursday and Friday is indicative of a short-term top. This is borne out by the 5-day, 5-min chart with Bollinger bands and RSI:
chart2.bigcharts.com
One can see a noticable 'negative divergence' between the stock price and the RSI on Friday.
In addition, there is no comparison between the chart patterns for AMAT and DEC and that of Apple. Neither of the former had RSI's anywhere near overbought conditions (until DEC's buyout was announced), at least not in the last six months.
Phil, I'm not trying to rain on your parade. Also, I agree that I may miss a continuing rally. I just think that Apple (barring some pending announcement from Jobs, etc.) is presently overbought. My current plan is to try to jump on the April 22.5's for between $100 and $150 per contract. I may succeed or I may not.
Sam |
