Apple is close to making history for a private company. But how can investors play that milestone?
Apple (NASDAQ:AAPL) stock surged more than 4% in after-hours trading to $197.95 after the company posted better-than-expected earnings, revenues, average iPhone selling prices and guidance. That’s less than 3% away from $203.45 per share, which would make Apple the first company to reach $1 trillion in market capitalization.
The company's optimistic forward guidance (for revenues of $60 billion to $62 billion and margins of 38%-38.5% in the fourth quarter) seems to factor in the expected added profits from a September launch of the iPhone 9.
While peers like Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR) undershot expectations and ignited fears of a tech bubble, Apple’s report seems to underpin its ability to rise above sector glitches and cut a category of its own. Will it be proved right?
Trading Strategies – Long Position Setup
Conservative traders would wait for a close on a higher peak, followed by a correction to verify the integrity of the trend, with a bounce forming a trough, higher than the June 22 level posted at $184.70.
Moderate traders may wait for a correction for a better entry, but not necessarily for trend confirmation.
Aggressive traders may enter a long position now, providing they incorporate a potential return move into their equity management.
Very-aggressive traders may enter a contrarian short, if an intraday rally stalls, hoping to ride a potential take-profit correction.
Equity Management
Minimum 1:3 risk-reward ratio is recommended, in line with supports and resistances -- price levels where demand and supply, respectively, are presumed to wait.
Trade Samples
- Entry: $190, yesterday’s closing price and round, psychological number, a presumed price level for buy orders.
- Stop-loss: $188, June 21 high, resistance turned to support, on market psychology flip.
- Risk: $2.00
- Target: $200, round, psychological numbers are notorious sale-trigger hot spots.
- Reward: $10
- Risk-Reward Ratio: 1:5