Let's talk about Apple (AAPL) and the current trading parameters, starting with the weekly chart.
Apple (AAPL) -- Weekly
Source: Dynamic Trader
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First note that Apple has hit a major upside target at the $113 area -- the first target off the April 2013 low. I always tend to get a bit cautious in a stock after this occurs, as the stock then becomes more vulnerable to a corrective decline.
Now, it is possible that the rally will continue on to the next upside target, which is around $128.97. But if that is to occur sooner rather than later, I'll want to see the key symmetry-based support hold up -- between $107.63 and $111.19. This "symmetry" comes from taking 100% of all the prior declines I've labeled on this weekly chart below -- which have amounted to between $8.56 and $12.12 -- and projecting them from the most recent high. So far the stock has held above the $107.63-to-$111.19 level. Actually, one of these projections is right about where the most recent low was made.
Still, if you've been watching my work on my Twitter account recently, you know that I've wanted a relatively tight trailing stop on Apple. This is for a couple of reasons.
Apple (AAPL) -- Daily
Source: Dynamic Trader
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First, Apple has met its key targets on both the weekly and daily charts, so it's in position for a corrective decline. Second, a few Fibonacci-based time cycles have increased the odds for a reversal right around the Thanksgiving holiday. If you had used the symmetry-based stop-loss level -- a little less than $2.65 off any new high -- you would have been stopped out of the stock earlier this week.
It's true: as easily as Apple broke the shorter-term support level, it did rebound after hitting the obvious symmetry-based support on both my weekly and daily charts. So, given this, the typical bet is for the rally to resume in earnest, and for the stock to hit new all-time highs, with a specific target off the most recent low around $122.06 area. That would indeed be the preferred scenario for Apple.
Apple (AAPL) -- 30-Minute
Source: Dynamic Trader
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But, since these scenarios won't always play out the way we'd like, I want you to be aware of some resistance on the 30-minute chart above -- and this level really needs to be cleared if a continued bullish scenario is going to play itself out. The most important area of resistance on this chart comes in between $116.51 and $117.22. It includes the 0.618 retracement back to the recent high, along with a 100% projection of a prior rally swing.
So that's my story, and I'm sticking to it. I'll only get concerned about a continued rally in this stock if the stock violates its weekly symmetry support at $107 to $111.
See here for general guidance on Fibonacci trade setups.
At the time of publication, Boroden had no positions in the stocks mentioned.