On the weekly chart we're able to draw a near perfect parallel channel for Apple.
Yes this analysis is simple, but keep in mind trading for the most part is simple, it's the over-thinking that makes it complicated. I was able to call the exact top of SPY using a simple trend line (see my related idea analysis below), and the same may be possible here.
Apple is approaching it's previous all time high. It's hard to imagine Apple making a new high during the time of a pandemic and high unemployment. People are not exactly looking to buy a new iPhone on the way home from the food bank, but it's not fundamentals driving this rally.
So why is Apple rallying? Simply put, it's the puts. The short interest for Apple is through the roof and institutions are making a killing stop hunting shorts, making them buy back their shares all the way up. Shorts are the unhappy buyers powering this rally.
When will the institutions stop? When bears capitulate and stop shorting Apple and fomo flip to a long, and then they get screwed again as they can't believe the strong rally is failing. You can see my previous idea on how calls go up when the market goes down, and vice versa. Retail traders get squeezed and are always on the wrong side of the trade. That's why 90% of retail traders lose money, they're wrong 90%+ of the time.
If resistance holds here we could see a retest of the bottom part of the channel. If shorts get squeezed right through it and a new high holds, then the upper part of the channel is the next likely stop with a squeeze above and then a sharp drop.
Think of it this way, institutions buy retail trader's disbelief. Emotionally, do you feel in your heart and soul that Apple at these levels during record high unemployment and a pandemic is completely absurd? You're not the only one, and most traders trade with their emotions and institutions happily take the other side of the trade as it's those same emotions that will make the bears buy back their shorts later in a panic, pushing the price to even higher more unreasonable levels.
Yes this analysis is simple, but keep in mind trading for the most part is simple, it's the over-thinking that makes it complicated. I was able to call the exact top of SPY using a simple trend line (see my related idea analysis below), and the same may be possible here.
Apple is approaching it's previous all time high. It's hard to imagine Apple making a new high during the time of a pandemic and high unemployment. People are not exactly looking to buy a new iPhone on the way home from the food bank, but it's not fundamentals driving this rally.
So why is Apple rallying? Simply put, it's the puts. The short interest for Apple is through the roof and institutions are making a killing stop hunting shorts, making them buy back their shares all the way up. Shorts are the unhappy buyers powering this rally.
When will the institutions stop? When bears capitulate and stop shorting Apple and fomo flip to a long, and then they get screwed again as they can't believe the strong rally is failing. You can see my previous idea on how calls go up when the market goes down, and vice versa. Retail traders get squeezed and are always on the wrong side of the trade. That's why 90% of retail traders lose money, they're wrong 90%+ of the time.
If resistance holds here we could see a retest of the bottom part of the channel. If shorts get squeezed right through it and a new high holds, then the upper part of the channel is the next likely stop with a squeeze above and then a sharp drop.
Think of it this way, institutions buy retail trader's disbelief. Emotionally, do you feel in your heart and soul that Apple at these levels during record high unemployment and a pandemic is completely absurd? You're not the only one, and most traders trade with their emotions and institutions happily take the other side of the trade as it's those same emotions that will make the bears buy back their shorts later in a panic, pushing the price to even higher more unreasonable levels.
My goal is to find the best risk:reward setups. For instance, if you risk $1,000 at a chance to make $5,000, you can afford to be wrong 4 out of 5 times and still not lose money. I hit my targets over 50% of the time.
