A Day Trader’s Dream

Jan 26th, 2010 | By | Category: General Comments, Steven Spencer (Steve's) Blogs
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You couldn’t ask for anything more than AAPL provided today. A selloff that began in the premarket from 208 that ended when a large buyer began accumulating at 203.40. An uptrend that once above 208 offered more than five points of upside. And a downtrend into the close that began with a hard down move through 211 and ended from pure exhaustion at 204.50.

Trading AAPL well today required that I use all three of my primary trading tools: Reading the Tape, Intraday Fundamentals, and Technical Analysis.

The primary trades I made were:

1) Short on the Open at 206 based on the hard premarket selloff from 208. Covered between 204.50-203. Chop!
2) Long at 203.50 after a significant buyer at 203.40 caused an up move to 204.50. Was a little scary buying into the pullback but caught a nice move to 205. Chop!
3) Short at the opening price of 206. Small rip.
4) Long above 208. small rip when 207.80 dropped.
5) Long above 208.30. Chop!!!!!! Sold most around 210.50.
6) Short below 212.40. Small chop!
7) Long 211.50 for a possible move back to the highs. Lightened up at 212 and hit the rest below 211 for a breakeven trade.
8) Missed the down move from 211 to 205 as I had a bunch of firm stuff to take care of. Rip!!

Normally, I would think this type of close is a very bearish sign for AAPL. But honestly, the market is somewhat loco right now and there are so many players trying to game each other that I’m going to look at AAPL with a fresh eye tomorrow. I heard at least three traders on our desk with less than one year’s experience chirping about how AAPL would selloff with the launch of their new product tomorrow. When something becomes the conventional wisdom it no longer provides a trading edge.

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4 comments
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  1. Steve:

    AAPL offered tons of opportunities with the volatility and big range, 206.5 and 209 were good buys to hold in my opinion.

    AAPL was acting extremely strong intraday, which made me hesitant to short the 211 momentum breakdown. AAPL held several times into the upmove, each time it broke down it seemed like a good long entry for a pullback buy, and there was some money to be made that way due to all the momentum and volatility.

    I know you mentioned that you missed the downmove due to firm stuff; but from your experience, what would you need to see to completely switch to having a short bias and holding AAPL into the close when the price was still attractive, knowing that shorting a strong stock could result in a big rip in case you’re wrong.

    Appreciate your response,
    Tapetrader

  2. Steve:

    AAPL offered tons of opportunities with the volatility and big range, 206.5 and 209 were good buys to hold in my opinion.

    AAPL was acting extremely strong intraday, which made me hesitant to short the 211 momentum breakdown. AAPL held several times into the upmove, each time it broke down it seemed like a good long entry for a pullback buy, and there was some money to be made that way due to all the momentum and volatility.

    I know you mentioned that you missed the downmove due to firm stuff; but from your experience, what would you need to see to completely switch to having a short bias and holding AAPL into the close when the price was still attractive, knowing that shorting a strong stock could result in a big rip in case you’re wrong.

    Appreciate your response,
    Tapetrader

  3. I was hesitant to short AAPL as well after the big run-up. But I was able to pull the trigger once for small size for a nice gain. I am seeing how my biases are getting in my way. It seems like sometimes it is the time to think and other times it is a time to just pull the trigger.

  4. I was hesitant to short AAPL as well after the big run-up. But I was able to pull the trigger once for small size for a nice gain. I am seeing how my biases are getting in my way. It seems like sometimes it is the time to think and other times it is a time to just pull the trigger.