Monday, December 10, 2007

Why I Didn't Buy Apple Today

Despite Rick's urging, I'm probably not going to buy Apple today. Although I really want to get into the market, this isn't the right stock to do it. There are many reasons I like Apple in the short term, but the price action on the stock just isn't shaping up. Here is the one month chart on Apple.

Apple Stock Chart

Now look at the last five trading days. See that nice uptrend? That in itself doesn't scare me. Most people don't want to chase a stock that has gone up like Apple, and for the most part I agree. But sometimes it makes sense if a stock is taking off, which I think Apple has the potential to do. But look at the last candlestick. You see how it is red? You see how narrow the candlestick is? you see how it is hovering right near the bottom of the price action today? This is a perfect Gravestone Doji setup.

For those not versed in technical analysis, think of it this way. You had a great run up in the stock. Today, the stock tried to go higher, which is why you have the point sticking up. but toward the end of the day, the bears took over and started selling the stock. It ended up slightly lower (there is still about an hour left in the trading day so this could reverse). This is generally a weak signal, but still significant. What makes this sign stronger is the fact that the market overall is up today, so Apple is looking weak here. Confirmation will come tomorrow if there is another sell off in the stock. I think Apple could break 200, but I think it could also fall down to support at the 170 level.

1 comment:

  1. [...] was grim.  That is going to be the theme for a lot of companies.  Good earnings, grim outlooks.  Thank god I passed on it at 195.  Tech is going to be a hard place to [...]