Apple Inc (AAPL)

I am going to start this post by giving you a longer view of Apple Inc. 

This chart begins late in 2012 when a share of AAPL was going for about $700.  This chart ends at present day. 

This is a Weekly chart of AAPL

Click for a larger chart of AAPL



• I find that many of us forget to look at the big picture.  Instead we get caught up in the smaller one and miss out on some details.  This chart of AAPL shows me some pretty handy info yet it is clean, simple to read, and lends itself to interpretation. 

What's on the chart? 

 

• Let's start with the long red downtrend lines (DT).  They show the decline from $700 to $400.  All three of them were drawn during the downtrend.  One of them follows the initial downtrend from $700.  The middle one starts at $700 and touches the top of an uptrend late in the downtrend.  The last one is similar to the middle one as it too starts at $700 and touches after an uptrend occurs.  Why draw these lines?  I was looking for the bottom...

• The smaller red DT lines are places you could have gotten into AAPL after the run back up began.  Do you ever hear people saying it's too late to get in?  They might be right.  But when you can draw a short downtrend line and the price breaks above, it is probably safe to try going long.  Don't worry that you didn't catch the uptrend at the Double Bottom.  Most people didn't.  It's ok to begin an investment after the beginning of a trend.  Just plan your exit so you limit your losses if the investment doesn't work out.  There is more detail about places to get into AAPL later in this post.

• The green line labeled "Double Bottom??" is exactly what it seems.  I was asking myself if this could be a double bottom.  If it was I knew there was a chance it was a sign that AAPL had seen the lows and it would be a good time to go long the stock.  Looking back it was a great time to go long.  That was about $150 per share ago...

• The green uptrend line labeled UT 1 shows the trend that AAPL has been following since that double bottom.  UT 2 is an accelerated trend that the price has been following since September 20, 1013.  As long as UT 1 holds, I will be long AAPL...

• The horizontal dashed lines are Fibonacci Retracement lines.  You don't have to have a Math degree to understand how to use them and what they mean.  But if you are in the Math degree club you probably know a little more about Mr. Fibonacci than you care to :-)  Anyway, I find it very interesting that AAPL came back to the 50% retracement line before turning up again.  It is common for downtrends to become uptrends around retracement lines.  The big question is always which one.

• My simple interpretation of the weekly chart is that AAPL is in a strong uptrend.  There is even an accelerated uptrend in place.  If you want to go long (or add to your long) you should try to do it after a bounce off an uptrend line or when a downtrend line breaks.

I showed you the Weekly chart of AAPL so I can show you the Daily chart. 

This chart starts at the end of the double bottom and ends at present day. 

 

 

This is a Daily chart of AAPL

• The daily chart is a little more erratic than the weekly but that is expected.  One thing to focus on though is that the Weekly and the Daily charts both show uptrends.  That is a pretty good indication that you are safe being long the stock. 

• There are many places you could have gotten into this stock after the double bottom.  The shaded green circles show you some of them.  All those shaded green circles show a downtrend line being broken.  And if you notice, they all lead to higher prices.  If UT 1 & UT 2 continue, there will be many more opportunities just like these. 

• Notice that I have drawn a red downtrend line beginning at the high on Thursday.  I drew it all the way down to UT 1 because it could take that long for the price to break the DT line if it is going to.  Based on what is happening with AAPL at the moment, I don't expect the price to even get to UT 2 before it breaks the red DT line.  But that is my expectation and it may have absolutely nothing to do with reality. 

• So how do I play this from here.  Well, first you should know that I took some profits on Friday.  The stock was following a VERY steep trend higher for 7 days.  Friday's price action fell below that steep trend so I took some profits.  The next place I will take profits is $545ish.  You can draw an UT line starting on 11/21 and touching the bottom of the next three candles.  It will be at $545ish on Monday and $547ish on Tuesday.  On Wednesday it will be at $550ish AND it will intersect the red DT line.  If apple breaks the DT line and stays above the UT line starting on 11/21, then we have a new and more accelerated UT line that has been formed.  These developments would be very positive for long investors.  If none of this happens then look for a bounce off of UT 2 or UT 1.  If it goes below UT 1 then then look for lower prices.  By the way, UT 1 is about $55 below the current share price.  That is about a 10% drop.  Do you really want to just jump in blindly and "hope" that the price doesn't go down 10% or more?  I sure hope not.

Base your investment decisions on the chart.  Trade (invest) what you see.  Not what you think, or feel, or hope, or ...    

Limit Risk & Protect Your Profits

 

Helping A Fellow Investor

First & foremost I appreciate simplicity.  I appreciate cleanliness.  I appreciate methods that work on a regular basis.  I understand that no method is pristine and most methods require some finesse.  The chart below shows an example of that finesse. 

Back in late 2010, ITUB began the downtrend that has lasted for 3 years now.  If you are investing in this stock you have to realize that the highs and lows are getting lower as time goes by.  The easy way to play this stock it to go short.  If you are going long, you are trying to make money the hard way.  Not that it can't be done but it will take longer and it will work less often. 

Look at how quickly this stock drops.  Look at the drops in July of 2011, April of 2012, and June of 2013.   Also look at the long red downtrend lines.  It makes sense that if a stock is in a downtrend, it will fall faster than it will rise. 

This is a Weekly chart of ITUB 

ITUB hit a high above the lower red downtrend line.  So I drew another downtrend line that starts back in November of 2010 and hits this new top.  This is the finesse I spoke of earlier.  But let's face it.  The 3 year old pattern continues as expected.  I drew a green uptrend line to show the last uptrend and where the price crosses below it.  I also drew a new red downtrend line.  The length of the line is arbitrary.  I have no idea how long the downtrend will last.  The angle of the line seems to be accurate though.  Time will tell.  I may need a bit more finesse along the way. 

I will say that I notice something I didn't put on the chart.  It has to do with the lows from mid 2012 and mid 2013.  Do you notice that these lows are close to the same level?  This may be a sign that $11.50ish is a level of support.

Now let's look at BBD.  Almost everything I said about ITUB holds for this chart too.  What are the differences?  Well I haven't needed any finesse yet.  And I am not willing to say that I see a level of support yet.  Here is a coincidence I just noticed.  It looks like the downtrend in both of these stocks started at almost the same time. 

This is a Weekly chart of BBD

I prepared one more chart to try to help you out.  That chart is of PANW.   This is a newer issue and therefor we have less history to go by.  That typically means there is a lot more finesse required. 

I noted the Day 1 high & low on the chart.  These are "mentally" important levels for an IPO.  You have to respect them.  I also drew a red downtrend line that started in September 2012.  The only other line on the chart is a green uptrend line that is much more of a horizontal support line in my mind.  I think this green line may show a double bottom that could lead to a change in trend. 

Friday's candle pierced the red downtrend line with greater than average volume.  It also closed above the red downtrend line.  If you want to go long this stock you may have good reason to do so.  Keep watching and let the story unfold. 

This is a Daily chart of PANW

Sorry this chart is so small but I can't get Blogger to let me change it's size.

You can click on it for a larger pic.

If there is any way I can help my fellow investor I am ready (as long as time permits).  I don't claim to be anything more than an investor who uses trend lines.  I am not the best investor out there.  I am not the most knowledgeable investor out there.  But I am someone who isn't afraid to spend some time helping out a total stranger.  I hope this post helps you. 

Timeframes Matter...

Charts Can Be Deceiving

I hope to get you to pay attention to other TIME FRAMES along with the one being presented.  You should look at the daily, weekly, and monthly charts before making an investment in any stock.  Then follow the trend.  Until it breaks.

 

 

 

I know, I know.  You are thinking that a chart is based on facts so there is no way it can lie.  Well, I don't agree.  What if the TIME FRAME used to create the chart doesn't give you enough of the history to really see the details?

I am about to show you a daily chart of JCP.  This daily chart looks like things are getting better for JCP's stock.  Maybe they are.  The daily candles have already crossed over a down trend (DT) line and are heading for DT 2.  They are actually following an up trend (UT) line very nicely. 

Let me just say that there are some reasons to "believe" that JCP's stock has made a turn for the better.  But I don't invest on what I believe.  I invest (trade) on what I see on the chart.  But which chart am I looking at?

Remember that the DT lines on the chart are places we should look for a potential change in direction.  Sooooo, be on the lookout.  Follow the up trend line until it breaks.  The one I am currently following is the green UT line.  And it's working.

 

This is a Daily chart of JCP

Now look at the weekly chart of JCP.  A larger picture of the stock's history tells a different story.  The weekly chart tells me that JCP is just going lower and lower.  It doesn't look like a turn around at all.  For me, I would not be willing to say that JCP is trying to turn around until the stock closes above DT 2.  When JCP closes above DT1, it will be safe to tell your friends & family to consider buying the stock in their retirement plans.  Right now though, DT 1 is a long way off.  So let's keep this between us active investors for now. 

Will there be opportunities to make money along the way?  Oh yes!  How about if the stock just follows DT 2 lower?  Sure, we all know there is a way to profit from a move lower.  Remember to trade what you see.  Not what you think, or feel, or hope, or ...

This is a Weekly chart of JCP

 

Do you see how some investors can be bullish while others are bearish?  It may be as simple as which TIME FRAME they are using to form their opinion. If I was recommending an investment to you and I only showed you the daily chart you might agree JCP looks bullish.  Looking at the weekly chart should damper your enthusiasm a bit. 

 

As I said earlier, I hope to get you to pay attention to other TIME FRAMES along with the one being presented.  You should look at the daily, weekly, and monthly charts before making an investment in any stock.  Then follow the trend.  Until it breaks.