Sunday, April 1, 2012

Chart Analysis–Shorting Apple is not a good idea

The chart for Apple  was discussed in a post by Peter Brandt. I referred to the post in a different context. Readers wanted to know my opinion on the Apple chart.  So here it is:

apple-mar30-12

 

1. Prices are making new highs. New Highs are Bullish. If there is one simple rule that we want to imbibe in our minds, it is this.

2. Brandt refers to a possible short sell when prices dip, then rally to a lower high. Assuming this pattern comes about, what is our expectation? What comes after a bull rally? The answer is: A correction. Therefore, we expect a correction if the pattern of lower highs does come about. Corrections are traded only by short term traders, and, that also with a lot of caution.

3. There is support at 500, then at lower levels. A decline could easily stop at these support levels, then see relief rallies.

My Point: Stocks making new highs should not be shorted. What comes on after the new highs is a correction, and corrections are difficult to trade.

3 comments:

Technotrader said...

Watched after a long gap CNBC today and ur view on BGR. Good call sir, please write something on low risk buy or sell

Dinesh Rishi said...

My Point: Stocks making new highs should not be shorted. What comes on after the new highs is a correction, and corrections are difficult to trade.

Bears learn this after using Tonnes of Burnol

Thanks & Warm Regards,

दिनेश ऋषि

Tapassya-Manthan said...

Dear Sir

Suppose,I am looking to short Nifty for a specific target on down side & appropiate suitable Stop Loss on upside.

Position may remain open for few months till mkt reach the target (if SL remains intact).

How should I plan my trade ?

I should go through NF or PUTs ?

What is advisable ?

Please guide.

Regards