On Monday, June 6th, we flagged Apple, Inc. (AAPL) as a shortable set-up as the stock broke down through its 50-day moving average on heavy volume that day. The stock then fell down near its 200-day moving average at around 324 on the daily and right on top of its corresponding 40-week moving average at around 326 on the weekly chart. Now we see AAPL staging a logical bounce up into potential resistance at the 330-331 level. We might look at this as a shortable zone, using the high of today, or the 340 level, or somewhere in between as your upside stop. Keep in mind that a stop at 340 is about 3%, so well within acceptable ranges for most traders, we would think.
The trick here is to see the general market come in from here in order for short positions to pan out today, but so far we are in the second day of a reflext rally. With QE potential still in play until the end of June, funny, low-volume rallies could make the short side tricky, so one may have to test a short position to see whether the market confirms the trade, and if one isn't making money by day's end, covering and preparing to "go back to the drawing board" tomorrow or the next day, or not at all. This would apply to any short positions one is initiating on this bounce, including UA.
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