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:
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.