Earlier this week, we made a SWEET trade in AAPL and today i wanted to go over HOW and WHY we traded this one...
So here goes....
Ok, so first of all, AAPL made an amazing BIG run up recently but it did get way too hot and needed a pullback... so kept telling AOT members to be patient because we will get a good trade in AAPL sooner or later and the time has come this week in the form on a "HOLY GRAIL" setup !!
A 'Holy Grail" setup is basically: a setup where a stock that's in a VERY strong trend, in AAPL's case, an UP-TREND, pulls back, tests and holds the 20 day MA.... In my experience, it's best to buy the 1st and/or 2nd TEST of the 20 day MA in a strongly trending stock....
Long time AOT members know I've been sharing the the "HOLY GRAIL" setup for YEARS and it's definitely one of my favorite setups!
When AAPL first tested the 20 day MA... AAPL was already down 4-5 days in a row, which made this pullback INCREDIBLY appealing for a risk/reward point of view and couple that with the fact that i was expecting the market to bounce this week(as i tweeted numerous times and i'll do a separate post on why i expected the market to bounce this week) ....
This is what AAPL chart(daily chart) looked like when it caught my eyes .....
So the first you should notice about the AAPL chart above is the fact that this a stock in a VERY strong uptrend and just pulled back 4-5 days in a row and TESTING the 20 day MA.... Now, once i saw that, i then quickly zoom into the 5 minutes charts and, like a good mechanic, you wanna look "under the hood" .... I'm now looking for "hints" this stock is looking to "bottom" or reverse so i can establish a long position...
Here's the 5 minute chart and what i was thinking thru-out the day while watching this stock:
Please take your time and really study the chart action as well as the commentary on the chart....
We kept raising/trailing the AAPL stop loss every +$1 increment(for example, once AAPL broke thru $219, raised stop to $218... once it broke thru $220, we raised stops to $219 etc etc), reason why i wanted to trial the stop loss so tightly as it kept ramping higher the next day is because AAPL had a product event the next day and didn't want to be holding the shares thru such a thing it could be a volatile hold....
Ended up stopping out of at AAPL at $223.00 for a +$5.55 gain in 2 days!!
Fast forward 2-3 days later and here's what AAPL is looking like now...
I hope you found this helpful!!
Happy Trading !!
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