Back in July, the decision support engine warned to exit Apple shares while they still enjoyed triple digit pricing status. Within a month, share prices fell from the 125-zone to the August 24 low near 90. They've bounced nicely since, but are not done fulfilling their destiny, which includes a probing of the 75 +/-5 area, with growing probability that 60 +/-5 will be seen.
Therefore, buying Apple here is not the optimal action that should be applied to these shares. Here is the updated chart, from the past analysis, that shows the path of least resistance for the coming 12-to-24 months.
Notice that the stochastics are in free fall conditions, which were last seen in the slide from late 2012 to early 2013, and took prices from 94 to 51 (a 45% crash). The herd stepped into buy the initial blast lower, which is only the first wave down of a down/up/down correction. Also, notice that the bounce has already reached the to the lower end of the pink box, which the decision support engine forecast, months ago, would be the bounce target. While we can't rule out further testing of the 120 +/-5 zone, it's not required.
Therefore, the optimal action for conditions like these are selling actions only. The parameters are: if long, use 105 as your protective sell stops, to keep you from getting sliced, along with Apple share pricing. If flat, use that level, as well as sell limits toward 120 +/-5 to establish short exposure. And, if already short, use these parameters to maintain, and ideally add, short exposure. The Apple is about to fall farther from the tree than it did at the August harvesting.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.