by Gavin M.
I am too lazy to put up the chart of this one stock so I will not post it. I am sure you already have an inkling of what it is. It is the stock that everyone, including their grandmothers, own. It is Apple Inc (AAPL). This week has provided a few countertrend trades on AAPL but the overall direction was up. Selling AAPL would have been quite destructive to your trading account as it moved past the barriers at 128 all the way now to 132.
It is amazing really that if you compared either the NASDAQ or the SPX to the AAPL on the same chart, you will see that the moves were due to AAPL for the most part. When AAPL hit a resistance and would fall 20-40 cents, the SPX would also take a serious turn. Perhaps it is because of Carl Icahn and perhaps it is the algorithm responsible of keeping the "Dream" alive that has made AAPL propel back to recent ATHs.
Even as a bear, I know when I should not try to stand in front of a crazy bull train. Do take note that AAPL is the most owned stock, not just in the US, but also in the world. The SNB has definitely confirmed this month it is a big holder of Apple shares. I would not even hazard a guess as to how much the GPIF owns. But when you have hedge funds, government pension funds and central banks owning Apple, you really have to ask yourself whether it is time to give up trading it. You can not fight a river with a strong current. You either swim with it or you find something else.
Surely, the best way to trade AAPL is to keep buying the dip. With our clients, I do try to be balanced. I tell them not to short and I actually tell them when they should be bullish on a stock, forex or a future. Last week really made me think hard about shorting AAPL right now. Maybe this is the reverse indicator. The fact that I am resigning from shorting could be the time to short AAPL (ha!). I do have to concede to the bulls these past few weeks. They have been relentless and have made more money than me in going long this stock.
It is a skill as a trader to be versatile. You must not let your own emotional disposition distort your trade strategies. While I will never find myself buying AAPL shares or Calls, I also will just stand aside and not short it. There will always be a time to short a stock no matter how bullish its movement can be. It may take days, weeks, months but sooner or later, buyers will be exhausted.
Even with my bearish mentality, I find stocks to short on a daily basis. There is always the VIX to monkey hammer. There are always SPY Calls to short or SPY Puts to short. Perhaps I may even just sell AAPL Puts! Of the thousands of stocks out there, always find your niche. As for me, my play is always on the sell side. There is always a security out there that is on the verge of falling. Take Twitter for example.
Until the, BTFD on AAPL kids!
Traders from Equity Sense will be writing on this blog on positions and other market-related things.