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The AAPL Trade

Yesterday the AAPL Watch “event”, started at 1 pm EST time with the launch of the much anticipated Apple Watch concluding with Tim Cook’s presentation somewhere around 2 pm EST. Keeping in mind that the broader markets had a slow and precipitous selloff on Friday, albeit with the jobs number being released with general concern of sooner than expected rising interest rates. AAPL rallied into the news to be up over $2 on the day, stopping short of $130 before “selling the news” and pulling back some $4 to go slightly negative and then closing positive on the day with good volume.

The markets, for the day it seemed, discounted Friday’s action, at least by media standards, leaving the question for traders and investors is what to do with AAPL. We will give a trader’s point of view and for now, we view it as a “no play”. Any other stock, take PANW (arguably a similar chart), which had a decent range with material news that yes, had good volatility and volume, would be considered a no play because AAPL finished positive on the day with traders taking profits and not the shorts not taking command. Of course any stock, AAPL included, that had range, volume, and good price action will most likely be a decent trading stock because it’s in play but the time for us to look at AAPL as a short is to forgo trying to pick the top because for those traders that have been attempting to do so have probably been getting scalped to death and hopefully on small share size.

The Market Movement

The trade for us and what we want to see is AAPL down 3-5% on the day and maybe even more. We will give away the trade on trying to pick the top and capitalize on bigger share size when and if AAPL does have that big down day with 2-3X volume and then will we start to leg into a good short position keeping in mind that the trend of the market(s) are cooperating which as of Tuesday morning the inside day from last Friday seems to be following thru. We aren’t analysts and aren’t here to predict if the AAPL Watch will indeed propel the stock higher but as a fund manager put it yesterday, he didn’t know he needed to have 1000 songs in his pocket when iPod was announced either.

So whether it is AAPL or any similar acting stock and/or indices, if and will AAPL does have its big down day, we will let the stock rest and then look to take a position if the above criteria are warranted. As of the opening trade, Monday am, with the Nasdaq down over 1.2%, AAPL is down $1-$2 or so; hardly an endorsement to start a short position at this point but if the market stays weak and AAPL starts to crack and closes weak with good volume then we will address.

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