A Look at Tomorrow's Trading: $AAPL and its Implied Range

Would it be nice to know the range for Apple's trading tomorrow?  It could be useful.  Here's a cool indicator that I coded and have been playing with quite a bit lately.  It's a band of the trading range for tomorrow that is derived from the implied volatility of Apple's options and I call it tomorrow's "implied range".  Here's a screen shot:

A crystal ball?  Not quite.  But it is a cool way to see which direction that tge market has a bias for.  I run these numbers for the entire S&P500 on a daily basis to see what tomorrow's implied range and what next month's implied range is for every stock.  I track these number in a spread sheet.  I'm still figuring out how to incorporate this into other aspects of my trading..it seems to have some good potential.

So, for what it's worth, the options market is predicting that $AAPL will trade down tomorrow.  Since Apple is a Leader in the market, this might drag down the entire market.  It might be nice to know how many stocks in the S&P500 the options market is predicting will trade higher or lower...that could provide a nice edge going into the trading day.

I hope everyone's ready for another great trading week.

TLT

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As someone was nice enough to point out...today is president's day so the markets are closed.  This range would be the implied range for the next trading day which is Tuesday.

Looks like a Big iPhone and Sounds like a Feminine Product: the iPad

Apple presented their new tablet today and the market shrugged...although the market in general being weak could be to blame for any reaction or lack thereof (to be fair, AAPL, RIM and T got a little boost when AAPL announced the price). The biggest reaction I saw regarding the iPad was all the jokes being sent around the online trading room today when the traders heard the name of the tablet. The Fed is making their announcement as I type this so I better go and watch the reaction...gotta see if my short is still a good position.

Hope everyone's having a profitable day.

TLT

Today's Market Leaders

Keep an eye on these four individual stocks...they are certainly some of the market leaders that the rest of the market tends to follow. Bottom line, if the market is moving higher, these stocks need to be moving higher also and, more importantly, if these guys start moving lower, watch out! The four to watch: AAPL, AMZN, GOOG and GS. Here are the daily charts: What's there to say about AAPL besides...it's one of the strongest and most innovative companies out there and the market loves it...thus, we need to watch it.America's retailer...this is the new economy and Amazon is where it's at.Google rules the world right now...period.King of the club is "Goldman." As I heard on Bloomberg radio the other morning..."Where Goldman goes, so goes the market."

There are other important market leaders and some etfs, such as the emerging markets funds, that are helpful for gauging risk appetite but these four stocks are worth watching closely.These four alone will offer clues and insight about the market...look to them for upside confirmations and watch them for warnings of market vulnerabilities. The warning signs will be very significant because if and when this market makes a move lower, it will be swift.

Have a great weekend!

TLT

More AAPL

After my last look at Apple, which was not very long ago, I concluded that I wanted to buy around the 138-140 range. Well, that ship might have sailed, or at least it seems that way. One thing that you have to do when trading is be open to changing plans. I'm not saying that I will not buy in the previously mentioned range, but the current chart seems to indicate that a short term (and very tradeable) bottom my form above my target entry range. Here's the daily chart: I may have drawn the current price box a little too tight and I would not be that surprised to see the price fall back to the 145-150 level. The key is to let the market make the bottom. How will we know if the market makes a short term bottom? Watch the support levels and the BB Width. If AAPL bounces off a support level, lets say 155, and the BB Width hits a new low and levels off, then we know that a bottom is likely occuring.

I will look to buy while the BB Width is low, before it breaks out to new short term highs. This helps you get in the trade while the stock is still consolidating which allows a better risk to reward trade because you're getting into the stock prior to the next big advance in the stock. And what if the stock fails to advance to new highs? Dump it if it falls below the prior bottom.

It's impossible to say how much is left in this stock because it seems to be a very crowded trade, but don't underestimate a market leader like Apple in a short term bull market (which we are currently in).

Have a good day.

TLT

AAPL Revisited

I was speaking to my brother-in-law about Apple this weekend--a stock that we have both recently traded but are now out of--and he commented on how he'd like to get back into it at some point. This got me to thinking...how would I get back into it? Well, I've put together a little scenario/trading plan and if it works out as planned (which it often doesn't), I'll take the trade. Here's a chart with some annotations indicating my various buy, stop and profit target levels:Ideally, I'd like to buy in the $138-140 zone and take my profit at $160. This is just a range trade, the sort of trade that Apple has been offering up lately between breakouts to new highs. A good hard stop will be essential for this trade because I'll be buying a pullback and the problem with pullbacks is that sometimes they turn into reversals...which could easily happen given the run that Apple has had lately. My stop will be at $133.

So to recap:

• Long @ $138-140
• Stop @ $133
• Profit Target @ $160

This trade could provide a 22 point profit for a 5 point risk, assuming you get in at $138. That would be slightly over a 4:1 risk to reward ratio, which is certainly acceptable. What if the trade goes in my favor but it doesn't quite hit the profit target? I'll move the stop to break even once it gets halfway to my target.

There's the plan, now we just have to wait and see what happens. Always "plan the trade and trade the plan."

TLT

Out of AAPL

I booked my profits in Apple today...a nice little 17% gain. The trade lasted about 2 months and I bought in at the $119.00 level. Here's today's chart with my entry and exit notations.Two things concern me with the Apple trade:

1. Everyone's in it, and
2. Volume has been shrinking.

I'm not saying Apple is about to tank, it could keep going up forever, but I'm not comfortable with it anymore. I might buy back into it after a nice dip or some bad news.

TLT

AAPL Update and DXO

I bought some Apple back on April 13, 2009 and posted my trade plan, which included a couple of profit targets. Target number 1 was hit this morning and Apple looks to be in another trending move up. Here's the daily chart:So far this has been a pretty good "textbook style" trend trade...hopefully it will stay that way.

On a different note, I put on a trade in DXO this morning. DXO is the double leveraged long Oil ETF. I have a wide stop in place and also a big profit target...kinda necessary to have big profit targets when making trades that require wide stops. Here's the chart with my trade plan:Hope everyone's having a great start to the trading week.

TLT

Bought A Little AAPL Today

I couldn't help it...this stock has been so strong lately, hope I'm not just chasing the trend. I got a buy signal on AAPL because the Daily gave a recent buy when it broke out into new highs and the hourly chart just gave a nice bullish cross with the 10 and 20 moving averages. I've got a feeling that there's plenty of upward momentum left in this stock but, ultimately, price action will have to dictate when to get out. Here's a daily chart that shows some potential profit targets:Not doing to much today, except for a small position in the pound this morning. Hope everyone has a great trading day.

TLT