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Chart Of The Day: Trading Apple's $1 Trillion Market Cap Ambition

By Investing.com (Pinchas Cohen/Investing.com)Stock MarketsAug 01, 2018 10:01
ca.investing.com/analysis/chart-of-the-day-trading-apples-1-trillion-market-cap-ambition-200197370
Chart Of The Day: Trading Apple's $1 Trillion Market Cap Ambition
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 01, 2018 10:01
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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?

AAPL Daily Chart
AAPL Daily Chart

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

Chart Of The Day: Trading Apple's $1 Trillion Market Cap Ambition
 

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Chart Of The Day: Trading Apple's $1 Trillion Market Cap Ambition

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