Why I'm Sour on Apple Right Now

12/14/2012 7:00 am EST

Focus: STOCKS

Scott Redler

Chief Strategic Officer, T3 Trading Group

Often a favorite trading vehicle for traders, Scott Redler of T3 Trading Group shares why AAPL is not the apple of his eye right now.

Apple (AAPL) is a stock I like to trade frequently because it often sets up well technically. AAPL saw a harsh down-move after topping out above $700 in September, and is now a bit broken technically. Whereas I usually trade the stock with a little bit of a bullish bias, right now I am very neutral and nimble.

AAPL relieved a lot of pressure with the potent reversal on November 16 and was able to bounce back up to near its 200-day moving average. However, buyers did not step in aggressively at those higher levels and AAPL never reclaimed the 200-day MA, a bearish sign. After putting in a higher low on December 6, the stock has been trying to bounce but has not been all that impressive.

chart
Chart courtesy of StockCharts.com
Click to Enlarge

Here is a shorter-term look at the AAPL price action yesterday, which worked well.

chart
Chart courtesy of StockCharts.com
Click to Enlarge

For short-term bullish composure to remain intact AAPL needs to hold the $537 area, which was Tuesday's low. The short-term reference point of resistance is Tuesday's high, and then today's high will be the level to watch. AAPL is often a great swing trading vehicle, but right now I am treating it as a cash-flow trading vehicle only. The stock has a lot to prove after the recent price action.

Disclosure: Scott Redler is long AAPL.

By Scott Redler, Chief Strategic Officer, T3 Trading Group

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