Ah...everybody's little darling AAPL. At the money options purchased off the 50% retrace bounce from the mid-May highs eventually reached a 10x gain over the course of the past week.
And the really smart folks who also bought in on the dip to the mid 140's for the quick pump did even better. That's right...a 10% or so portfolio bet on AAPL ATM's could have doubled your total holdings if you played them right. Amazing!
But that was then, and now we're at another spot. The recent trajectory of AAPL has been very steep, but it basically peaked coincident with the Nasdaq hitting and stopping cold at its 50 day moving average. That was yesterday, and the market has been testy since. While AAPL showed a little more strength pressing the edges of the wide channel shown above, it really didn't have the buying umph of late, and definitely showed some signs of cracking the rally late in the day.
We've got some tough economic news expected tomorrow, and we're coming on the heels of some weakness in the DOW and S&P, as well as a very toppy looking Nasdaq (relative to its wide channel since the july bottom). My bet is we see more weakness to push the indices towards a short term oversold condition, and set up the next leg of the rally.
AAPL is looking much like the Nasdaq at the top of a wide channel after a long and nearly monotonic and linear climb. A push higher seems unlikely until it drops lower into its channel, or at least just goes flat for some time, giving the channel upside little time to open up again.
Good luck!
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