Friday, February 17, 2006

Time to Short Apple?

Apple Computer (AAPL) looks like a pretty good short right now (or, if you're open to it, buying puts). I'd suggest a stop of 71.02 on this one.

23 comments:

Pappa Bear said...

Hey Tim: the DIAmond breaking to the upside kinda screwed things up here for a few bears, when can we look forward to shorting the DIA again?

Anonymous said...

Come on Man, A 13 year old girl could see that. I would expect a little more from a man with your knowledge.

Tim Knight said...

Hey, a trade's a trade! I'm not ashamed to post an easy recommendation!

Inn said...

Mr. Knight,

Those of use who are not experts appreciate ALL of your comments, including the suggested short on Apple. Thanks!

Tim Knight said...

My pleasure.

As for pappa bear - - well, I've been burned recently by "calling the top", so call me gun-shy! The DIA touched the ascending resistance line today, but I'm going to let a few more days go back before saying much more about the $INDU!

Ken said...

Regarding the AAPL short, where do you think it could fall to in the short term?, I would guess $65

Tim Knight said...

I'd say $56 or thereabouts.

Anonymous said...

Tim,
Seems to me BRCM is a better short ??
Comparing the two:
BRCM:
http://stockcharts.com/gallery/?brcm
http://www.stockconsultant.com/consultnow/basicplus.cgi?ID=sample&symbol=BRCM&87395#ttop
http://www.stocktargets.com/cgi-bin/ticker.pl?command=BRCM

AAPL:
http://stockcharts.com/gallery/?AAPL
http://www.stockconsultant.com/consultnow/basicplus.cgi?ID=sample&symbol=AAPL&1712#ttop
http://www.stocktargets.com/cgi-bin/ticker.pl?command=AAPL

What do you think ?

Des said...

Mr. Knight,

So you're suggesting that AAPL will tumble to its 200 DMA? Why are you predicting such a dramatic fall?

Tim Knight said...

I'm doing a measurement from the neckline (drawn on the chart) to the top of the chart and subtracting from the neckline; perhaps not coincidentally, this also corresponds with the next retracement level down.

Tim Knight said...

I'd never heard of StockTargets; thanks for the link - pretty cool. I look at BRCM, but it's not nearly so 'clean' a chart as AAPL.

Jeff said...

Tim,

Thx for the great site. Im a student over at Stanford, so it's good to meet a fellow Palo Alto-er. Could you do me a favor and describe which strike/expiration option you'd prefer for this AAPL trade and how you decided that? Thx for the help.

Des said...

Mr. Knight,

So this is purely a technical play based on head and shoulders, no regard for fundamentals, news, etc.? Don't you think that's a little risky with the giant that is Apple?

Tim Knight said...

Amazing how many comments my tiny little post yielded, especially on a holiday.

To Jeff from Stanford......I'd suggest the March 75 puts. I like puts that are just in the money, and I typically got for an expiration at least 4 weeks out.

As for Des, the whole basis I use for technical analysis is that the fundamentals are already built into the chart. It would be silly for me to worry about the fundamentals, whether the company is big or small. So, yes, I tend to be a bit of a purist as a technician.

Des said...

Mr. Knight,

Thank you. I understand your approach. I'm just worried that AAPL is too 'fundamentally' strong and that, even though it does indeed look overbought, nothing is likely to change. I'll watch with interest. Thanks again for the comments, I always enjoy reading here.

Anonymous said...

AAPL looks a risky short here.It is right at the 2+ year trendline support and betting on such a trendline break (until it breaks) is not a good idea.

Ken said...

don't they call the move back up to the neckline the "kiss goodbye" after the left shoulder move?

Tim Knight said...

I've never heard of the "kiss goodbye", but it's fitting. One day doesn't make a trend, but thus far AAPL is moving in the right direction (down).

Anonymous said...

No. I heard it called back kiss.

Ken said...

sorry, I meant to say after the right shoulder, not left

also would you say that there is an evening star formation there, which is bearish because it's occuring near resistance?

Tim Knight said...

This got stopped out today. Which is why I mentioned a stop price (71.02) in the first place!

Anonymous said...

Hey Anonymous:
don't know which 2-year chart your're looking at for AAPL, but the support doesn't come in until $56

Anonymous said...

AAPL also broke through it's 50day ema (by 15 cents or so, but it's a break, probably to take out stops)a strong up day like today shd bring us some selling tomorrow