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Micah Lamar

CEO AAPLTrader.com Stock & Options Mentor Helping traders become more successful! Specializing in advanced technical analysis, option spreads and the Greeks!

How much more can AAPL drop?

AAPLTrader MacD

November 9, 2012 (AAPLTrader)

Watching Apple Inc. (NASDAQ: AAPL) drop all this way from the $705 high is a horrible feeling for shareholders. My condolences to all the people feeling the pain right now on this AAPL drop.

Since AAPL is back to the mid $500′s (where it was about 5 ½ months ago in the middle of May) it’s time to re-establish our forecast on AAPL.

To put all this in perspective, we haven’t seen a drop this big since the 2008 market crash!

How much more can AAPL drop?

Let’s compare this drop to some of the biggest drops in AAPL  going all the way back to 2008.

  • May 2012 Drop – AAPL  fell $114 from $644 to $530, over 29 trading days, that’s 17.7%.
  • October 2011 Drop – AAPL fell $63 from $426 to $363, over 29 days, that’s almost 15%.
  • September 2011 Drop – AAPL fell $68 from $422 to $354, over 11 days, that’s 16%.
  • Aug 2008 Drop (Financial collapse) – AAPL fell $94 from $180 to $86, over 38 days, that’s 51%.
  • November 2012 Drop (the drop we are in right now) AAPL has fallen more than $160 over the last 32 trading days, that’s a whopping 23% in just six weeks.

AAPL indicators provide clues to future price movement

Notice the chart above, I know it’s hard to look at because of the huge recent drop, but none the less – Check out the MACD.
Compare the higher high on the price chart when AAPL hit $704 with the lower high on the MACD. This is called divergence and happens when our indicators are showing a different trend then the price, this can often signal a shift in direction.

The million dollar trigger

AAPLTrader trendsI get a ton of email and messages every day from AAPLTrader members wanting to know when to buy and when to sell AAPL. In the last few years my answer hasn’t changed much.

The first thing you HAVE to know before you buy AAPL is that it (like all stocks) cycles up and down and YES it is possible to know which way it’s cycling. I call these “Pay Day Cycles”.

If you have ThinkOrSwim, you can use there Hiekin Ashi chart, this is the easiest way to see which way AAPL is going.  When AAPL is going up on the daily chart -  it’s green, when it’s going down on the daily chart – it’s red.

I’ll tell you the same thing I tell my Premium Subscribers…  I’m waiting for the Heikin Ashi to go green again for at least a couple days, this will tell me that price has stopped moving down and is starting to move back up.  This simple little tool will save you a ton of money, and money saved is money earned.

If you own AAPL shares, here’s what you need to know

If your a long term share holder then the first thing you need to know,( besides what was stated above about AAPL cycling up and down) is how to protect or hedge your position.

A sage friend once told me: “options are designed for managing risk, not speculation”.  Options are powerful tools that will help you limit your down side risk.

Everyone who owns AAPL shares needs to at least know the following:

1. How to buy a protective put.
2. How to sell a covered call.

This is the bare minimum… Why, because AAPL naturally cycles up and down and it’s during these down cycles that we need to know how to protect ourselves and make a little cash in the process.

For people who are sitting on a lot of stock and want to learn more about delta hedging, protecting your shares or just making some extra cash then we have the solution for you! The AAPLTrader team is now offering one on one mentoring through our University Program to support people in creating a tailored trading plan specific to your goals.

If this is you and you want some assistance creating a rock solid trading plan, then please email us at support@aapltrader.com
or visit our contact us page and we can help!

Have a great weekend everyone and try not to stress too much about AAPL, next week I’m looking for those two green bars I mentioned above!

Trade On,

- Micah -

PS. if your feeling a lot of pain right now looking at your AAPL position – check out this helpful article

http://www.aapltrader.com/aapltrader-blog/successful-traders-secrets-part-1/

 

Micah Lamar is the CEO of AAPLTrader.com. He also writes for the Wall Street All-Stars.

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3 Comments

    Great article Micah! Covered Calls and Protective Puts should be the first thing a shareholder should know about options. Agreed!

  • Thanks Micah. Can you put your daily buy recommendation with the two technical indicators on AAPL analysis page. It is all about buy and sell. We can use different trading strategies, we need to know the stock is likely to go up or down.

    • Hey Trader17, thanks for your comment and thoughts on the AAPL Analysis page. I will look into your idea, thanks!

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