Contrarian Call on AAPL

Apple got my attention this morning when they took a big hit in the morning, much worse than the general S&P and Nasdaq. On the RSI Oscillator they went way oversold so I decided I would look for a bounce to get a relatively quick Call trade.

Shortly after 10am, AAPL had it’s first bounce, traded sideways for a bit, then found a new low with a positive RSI divergence. I thought about entering, but decided that really it appeared to keep trading mostly sideways just to consolidate and break down again to find a lower low. It kept doing this over and over again, all the while making more positive RSI divergences, but never giving a meaningful bounce which I would say is about $1.

This chart also shows how RSI divergences do not always work. Today, they failed over and over all day. But finally at the end of the day we had a better bounce on decent volume. I remember that AAPL did almost exactly the same as today’s action recently on 8/24. They gapped up the next day and traded up every day for a week. So near the end of the day (last 5 minutes) I grabbed a Call contract. September 15, Call 185.

And BTW, in all of this I didn’t even bother to look up what happened to cause AAPL to sink. Mostly because I really didn’t care and didn’t want it to affect my decisions. Now I have found out that the reason for the fall is that China just told all the Government workers that they are no longer allowed to bring iPhones to work. I suppose that negative sentiment on iPhones by the Government, may also translate into the Civilian population of China, not just Government workers.

This could translate into lower iPhone sales overall for Apple for an extended period and if so we may be looking for downside trades on AAPL. AAPL got clobbered after earnings even though they beat on earnings, just because iPhone sales are seen to be slowing, and this news just adds to everyone’s worry. But technically speaking, I am still looking for a bounce from this downswing. Stocks do not go down forever. Even in the worst of times they will still bounce, and some of the most powerful trade-able upswings occur during bear markets.

On a related, but insignificant (to trading) side note, if I were Apple, I would start making plans to shift all their manufacturing to someplace other than China. I believe the Chinese would change their tune if they believed that Apple was ditching China. They probably make more money from Apple than any other single company. I’m not sure if Tim Cook has the balls to ditch China, but if he made such a clear announcement Apple will become an American favorite (more than they already are) and many other companies will make similar announcements.


NVDA kind of did the same thing today.

I watch certain stocks every day because they have so much power over the market direction and apple nvidia are two of them. These super titan tech companies have been carrying the market this year and now some of them are wavering a little.

That Sep call looks like a solid investment as AAPL took off at the close…doc


Regarding NVDA (and perhaps I really should put this in the NVDA thread, but oh well), I really think the chart looks terrible. The following is the daily chart for 2023.

Now, okay, looking at this chart it looks wonderful. It starts at around 150 and ends almost at 500. And I would say if you bought it at the beginning of the year and sold it today, then congratulations, you did very well. But if you are thinking about holding, or worse, entering a new position, then you really need to think hard.

Looking at this chart, I notice that in the beginning of the year, they had a very healthy bull market. Low volatility and basically “climbing the wall of worry” which is great. They went from around 150 to around 300. 100% in a handful of months. On May 25 they gapped up big on earnings the afternoon before, and they kept going up. But if you notice, after 5/25 the action becomes much more volatile. The lengths of the candles are much longer than they were in the beginning of the year. And the volatility keeps getting worse.

Even though they keep reaching for new all time highs, the volatility is a bearish sign in my mind. Yes, even big green candles are bearish to me. Volatility is common in bear markets and also at major tops and bottoms. Bear market rallies are often more powerful than the rallies in the middle of the greatest bull markets.

This NVDA chart looks “toppy” to me. Now, I’m biased because I’m holding some longer term NVDA puts since before the last earnings. But I’ll also point out that there is a long standing negative RSI divergence which carries more weight to me because it is on the daily (versus intraday) chart, and lasts for months. That said, there were multiple RSI divergences on this chart and they kept hitting new highs, but the one in the middle of July was tradable as a downtrend to the middle of August. NVDA is currently back down to pre-earnings levels which says those gangbusters earnings numbers amounted to basically nothing (so far).


Okay, so I got clobbered on this little call play on AAPL. Tim Cook failed me! Gone are the days when Steve Jobs would do it live and when it’s all over he’d say, thank you for coming, and oh by the way there’s one more thing…

Then he’d set the world on fire.

Oh well…live and learn.

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You couldn’t have predicted this China news. No one hits ten out of ten. I think you are doing fine personally. This kind of trading is not like gambling. When you gamble the house odds are against you. When you invest on facts like earnings information, news, market trends, expected moves and all that TA stuff the odds are better…doc

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