Looking over my stocks and currencies today. Taking a real hard look @ AAPL right here! The weekly chart is really shaping up and I could see a nice run in our future for the bulls.
But when you look at the daily chart it's hard to overlook the recent fall from grace. We have a possible Head-N-Shoulders developing right now. If this is the "real" pattern shaping up then it spells bad news longer term for AAPL. We are working on the right shoulder now and I'd see a target price right around $680 or so.
So which way would we eventually go? Well, I think all the "fiscal cliff" talk will give us our signal. If our elected officials can finally work for us and not themselves, an agreement will be found. This would lead to a massive stampede by the bulls. If we jut get more business as usual and we "go over the cliff," you can expect the bears to have their way. I would have no doubts of seeing the mighty AAPL back below $400!!
So how do we play it? Well, using options of course. Let's try for a Feb play and go with the $680/$685 Call Spread.
Buy FEB AAPL $680/CALLS @ $6.75
SELL FEB AAPL $685/CALLS @ $5.95
Total risk is $0.80
Our possible reward is $5.00
If we get those contracts on Monday, we must watch closely. If Congress can hammer out an agreement like many folks seem to think we can sit back and enjoy our profits. If we get closer and close to Christmas with no agreement, I'd try to look for my exit.
Good Luck
Boca_Bobby
Mom said there would be days like this!
