Looks Like Apple is Trying to Bottom
Doug postulated this morning that Apple (AAPL) is trading like a stock about to "flash crash." I actually believe it is simply trading like a stock trying to find a bottom. It is not a pretty process, and it often comes with plenty of doubt and even more work. But, in looking at the chart, I see Apple is really trying to establish that bottom around $590. The relative strength index and stochastics are both showing signs of flattening, while the stock has held price support for two consecutive days. I wouldn't sound the all-clear signal just yet -- but I think the risk-reward scenario on shorting Apple here is heavily skewed toward the risk without a whole lot of potential reward.
Speaking of risk-reward, I think this needs to be the first question on any investor's mind when looking for Hurricane Sandy plays. The question I would ask myself is, "Has anything changed with the long-term picture for the company I am about to buy?" If there is no long-term sustained benefit to a company's business model, then the trade is simply that -- a trade. It is not an investment. I am going to sit out any of those names for the remainder of the weak and just watch. If there are any long-term opportunities to be had out of this disaster, waiting a few days will mean only missing a small part of a much larger move....241 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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