4 Trade Ideas for Apple: Bonus Idea

• Posted by Greg Harmon
• on May 31st, 2022

Here is your Bonus Idea with links to the full Top Ten:

Apple, $AAPL, was the last Market General from the pandemic era to be attacked, but the market gods finally came for it in April. It sold off through April and the first 3 weeks of May until reaching a potential bottom. On May 20th it printed a Hammer candle, a possible reversal that reached down intraday to retrace 38.2% of the full move higher following the pandemic low and a drop of over 27% from the all-time high. Reversal candles need confirmation and it provided that the following day with a move higher. It held there for most of last week and then drove higher Friday.

This took the price to prior resistance and back over the 20 day SMA for the first time since May 4th. Momentum has also surged with the RSI now at the midline and the MACD crossed up and rising. There is resistance at 150 and 156.50 then 162 and 166 before 168 and 171.25. Support lower comes at 147.25 and 144.50 then 142 and 138.50 before 137. Short interest is low under 1%. The stock pays a dividend with an annual yield of 0.61% and began trading ex-dividend on May 6th. The company is expected to report earnings next on July 25th.

The June options chain shows the biggest open interest at the 150 and 140 strikes then 145 on the put side. On the call side it is biggest at 150 and then spread from 155 to 180 above with some size at 145 and 140 as well. July open interest is spread from 165 to 125 on the puts, biggest at 160 and 140. On the call side it is spread from 140 to 180, biggest at 140. The August chain covers the next earnings report and shows open interest spread from 160 to 120, biggest at 120 on the put side. On the call side it is spread from 150 to 190.

Apple, Ticker: $AAPL

Trade Idea 1: Buy the stock on a move over 150 with a stop at 144.50.

Trade Idea 2: Buy the stock on a move over 150 and add a June 145/140 Put Spread ($1.25) while selling a July 165 Call ($1.60).

Trade Idea 3: Buy the July/August 160 Call Calendar ($2.65) while selling the July 135 Puts ($2.55).

Trade Idea 4: Buy the August 135/155/170 Call Spread Risk Reversal (30 cents).

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After reviewing over 1,000 charts, I have found some good setups for the week. These were selected and should be viewed in the context of the broad Market Macro picture reviewed Friday which heading into the Memorial Day Holiday, the unofficial start of summer, saw equity markets had their strongest showing in nearly 2 months.

Elsewhere look for Gold to pause in its uptrend while Crude Oil consolidates in its move higher. The US Dollar Index continues to pullback in the uptrend while US Treasuries bounce in their downtrend. The Shanghai Composite looks to continue the short term trend higher while Emerging Markets continue the downtrend.  The Volatility Index looks to remain elevated, but falling, making the path easier for equity markets to the upside.

Their charts all printed reversal patterns on both the short term and long term timeframe. On the shorter timeframe the IWM, the QQQ and the SPY all made higher highs ending the week with Three Advancing White Soldiers patterns indicating a reversal. The longer timeframe also shows strong reversals off of key Fibonacci retracement levels. These indicate more upside to come. Use this information as you prepare for the coming week and trad’em well.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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