I am not going to dress this up. I am long Apple (AAPL) . I had a $176 price target on the name. When it got there, I sold half of my long, and placed a $197 target on the balance. I felt very smart. I had played the name like Stradivarius, had I not? Just one thing. Apple itself did not obey my plan.
Instead of spiking onward to glory, the news cycle changed for Apple. Stories of intentional iPhone slowdowns as new products were released ended up being... maybe explainable, but that news had not been widely disseminated to the public customer. Snide remarks were made here and there. You heard them, as had I.
Then the super-cycle appeared to be less than super. Still Herculean, by any other consumer electronics company's standards, but not the five-run home run that some had hoped for. The name sold off hard as the equity markets overall sold off hard.
Oh, by the way, CEO Tim Cook downplayed the idea of a special dividend at Tuesday's annual shareholder meeting. That could be a small negative for the fast money folks.
I added to many long positions last week at what seemed like discount prices. For the most part, these purchases allowed me to post short-term profits in a portfolio whose core positions were taking a nasty punch in the nose. Apple was among the names I bid for last week. My bid ($148) in Apple was never hit. The stock bottomed at $150, and now stands above $164.
So, now what? Let's take a look. The balance of my position is still nicely green. The $148 purchase would have beefed up the investment, but not significantly altered the average basis cost.
There are still some nasties lurking on this chart. Money Flow appears to be no short-term friend. The daily Moving Average Convergence Divergence (MACD) is grotesque, although the 12-day exponential moving average (EMA) has started to curl upward toward the 26-day EMA. A cross-over of those two lines would be helpful.
Relative Strength, after bouncing off of technically oversold levels is at least, starting to show some life.
The blue fan lines illustrate to me that the depth of support did indeed show itself just above a 31.8% re-tracement of the entire move from May 2016. It also did reassure me that the bid I made was at least founded with some kind of market-based reasoning that allows me to pretend to myself to be less of a fool.
So, I think we know where short-term support lives. How about resistance? $197 is no longer an acceptable target, unless you are more the long-horizon type and less the impulsive trader type.
Using a simple Fibonacci model that starts with the stock's recent fall from grace, first line resistance should appear right where it has, at a 50% re-tracement of this move. There looks to be more traffic in the $167.50 area before any attempt can be made at re-testing the old highs. For those looking to get out, that is where there may be a fight.
For those, who like me missed that bottom, but would still like to reduce their net basis cost, as of last night's close you could still write March 16 Apple 150 puts for $0.90. That'd pay for a nice St. Patrick's Day feast.
(A longer version of this column appeared at 7:37 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Stephen "Sarge" Guilfoyle, Jim Cramer and other experts throughout the market day.)