Fitz Bits: Apple Lets You Get on Board

Today we'll look at some reader requests:

• Excel Maritime (EXM - commentary - Cramer's Take)
• Apple (AAPL - commentary - Cramer's Take)
• AIG (AIG - commentary - Cramer's Take)
• CF Industries (CF - commentary - Cramer's Take)
• Yamana Gold (AUY - commentary - Cramer's Take)

Each day, I'm featuring several reader requests for the current technical take on a stock. I can't assure you that I'll get to yours, but I will certainly make every attempt to do so, as long as the stock meets the following criteria.

1. The average daily trading volume needs to exceed 250,000 shares. If a stock trades too thinly, chart analysis doesn't help much, because there just are not that many traders involved. One big buy or sell order can move the stock in ways that chart analysis just cannot predict. So let's stay above 250,000 daily shares.

2. The stock really needs to be trading above $5. Sub-$5 stocks don't get the same treatment by institutions and portfolio managers. Also, many traders set their trading screens to ignore stocks below $5 just to cut down on their trading candidates. While I'm sure your favorite penny stock is the next undiscovered gem, I'm not in the business of breaking news stories ... so once your gem is discovered, let me know, and I'll take a look at the chart.

3. Make sure you check my recent "3 Stocks I Saw on TV" videos. I don't want to be too redundant, so if I've recently covered a stock in video format, I won't repeat it here.

Hopefully, you've noticed that I alternate between daily and weekly bars in the charts. It's important to understand the underlying rationale for choosing one time frame over another. I differentiate between these time frames in pretty simple terms.

The longer time frame -- the weekly bar chart -- is my "decision" time frame. I want to remain in phase with the trend, and I use the weekly bar chart to identify the trend. So I'll feature a weekly chart when I want to emphasize a certain aspect of the prevailing trend -- not a specific buy or sell point. This weekly chart is the time frame in which I make my decision: Do I want to buy or sell the stock?

The daily chart is my "action" time frame. Once a decision is made on the basis of the weekly time frame, then we zoom in on the daily chart to choose that level at which action is taken. The daily time frame is my preferred frame of reference for actually implementing the decisions I've made on the weekly chart.

In your own analysis, make sure you are using different time frames for different trades; otherwise your actions will largely be a function of your emotions.

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Yesterday's breakout above short-term resistance clears the way for the next leg higher. I'd look for $60 as a minimum price target for Excel, with a stop back down below prior resistance.

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AAPL has been a really tough stock to buy. Why? Because the darned thing just hasn't stopped moving higher for the past month or so. It seems like every time the bulls take a break for just a couple of days, the next advance is even faster than the prior one. I'd look at last week's little pause as just a resting place on a march to $200. I'd be a buyer now, with a stop back in congestion.

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I've received tons of emails asking me whether it's time to buy AIG. My answer is simple, and it doesn't even require a chart for reference. Why do you want to buy this stock, right here, right now? Why? With thousands of tickers in the trading universe, what is appealing about buying a company that is deep in the bond insurance business? Is it because you really think you'll make a lot of money on the trade, or is it because you want to be right about timing the bottom? If it's the former, then think again! There is just too much pain in this chart to make it easy money. And if it's the latter -- good luck.

This stock is a falling knife in search of an open hand. Don't let it be yours! Sure, the stock is due for a bounce -- after all, it's so far below the 40-week moving average that a snapback rally seems quite likely. But that's a pure technical call. The high probability trade is simple: Step aside and let somebody else take this bullet. If you're itching to buy something, buy Research In Motion (RIMM - commentary - Cramer's Take) -- it's a safer trade.

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Notice how the 50-day moving average has been loosely defining support over the past six months or so. Although each pullback has extended significantly below this key moving average, the bulls have ultimately stepped up and pushed the stock to new heights. This latest pullback to $130 has provided a great reference point for support. If CF fails to push above $160 and instead falls below the 50-day moving average - which is currently resting just below $130 -- I'd be a seller. Why? Because a fall below the 50-day moving average breaks the pattern of higher highs and lows.

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AUY has been a really volatile stock. Now, I know that all the gold bugs are gaga over this stock. But I'm not seeing the love yet. A rising dollar doesn't equate to higher gold prices. In fact, the opposite is true. But if AUY moves above the 50-day moving average, then I'd probably change my stance ... but only barely. In light of a firming dollar and bottoming interest rates, gold is one metal that doesn't make much sense to me.

Be careful out there.

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At the time of publication, Fitzpatrick had no positions in stocks mentioned, though positions may change at any time.

Dan Fitzpatrick is the publisher of StockMarketMentor.com, an advisory newsletter and educational forum dedicated to teaching effective risk management and trading methodologies to aspiring traders and investors. He is a former hedge fund manager and a member of the Market Technicians Association, and he now trades from his home in San Diego, Calif. While Fitzpatrick holds various securities licenses, he does not give recommendations to buy or sell stocks. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. He appreciates your feedback; click here to send him an email.