It’s Time To Buy Apple

| July 10, 2012 | 0 Comments

Apple OptionsI’m the first to admit that I’ve been late to the Apple (AAPL) party.  But my tune has changed; I’m now onboard.

However, before I jump into the details, let me tell you why…

The main reason was complacency and stubbornness. 

Going all the way back to July 2006, I had eyed the pullbacks in AAPL but failed to pull the trigger.  What a mistake!

Then, as it pushed higher, I came up with every excuse in the book why I shouldn’t buy this name.

It’s a bit like when a child breaks a friend’s toy and then declares that “it was a bad toy anyway,” rather than taking responsibility for their actions.  We make excuses for our mistakes.

Fortunately for us, AAPL continues to give us plenty of chances to repent because it’s in an amazing uptrend.

As a matter of fact… the next leg up has begun.

Here’s what went on…

Following a big rally early this year, AAPL consolidated between early April and late June.  Technically, it formed what’s known as a classic bullish “flag” pattern (technical term for a pullback).  At this point, there were two indicators which lead me to believe this mini-downtrend wasn’t going to last.

First, while Apple made lower highs for three months, it stopped making lower lows in late May.

And second, at the same time in late May, it found support at its 100-day moving average.  This helped squeeze the stock upward through its $590 resistance level.

Apple (AAPL) Chart

Now, while it might sound complicated, this is nothing more than classic chart work.

So, what can we conclude from this perfectly set-up chart?


Even though Apple may have some short-term declines, there’s no doubt Apple is in a long-term uptrend.

And based on this analysis, AAPL is ready to move.

I think this will happen in conjunction with their earnings announcement, which is set for July 24.  There’s a very strong chance that AAPL will run back near its old highs around $644 on a better than expected announcement.  

But, there’s more than just technicals… there are also other reasons to like AAPL.

One in particular that I think doesn’t get enough attention is that penetration remains quite low in China.  I believe that after pricing in years of dominance in North America and Europe, the market hasn’t yet valued AAPL’s emerging-market potential.

The other important point is at some point, management needs to split this stock.  It hasn’t been announced, but I believe it’s only a matter of time.

And this will be extremely bullish when it happens.

Bottom line…

After a close look and analysis of the chart, along with their innovation and ability to penetrate any market they see fit, AAPL is poised higher.

I would say that this is a perfect situation where any trader can look at buying some AAPL July $600 or $610 call options to capitalize on what will be another leg up in this stock.

Safe Trading,

Marcus Haberman

Tags: , , , , , ,

Category: Options Trading Basics

About the Author ()

Marcus Haber is the co-editor of Options Trading Research and boasts well over a decade of real-life options experience. Learning from some of the biggest names in the business, Marcus has served as an Options Strategist for a number of firms and was also appointed to the Options Advsiory Board with Pershing, a branch of the Bank of New York.