How to Play Apple as Earnings Approach

By ChartLabPro.com  NOV 30, 2012 9:26 AM

If you got in on the early Buy recommendation, consider exiting at $610 as AAPL reverts to the mean.

 


MINYANVILLE ORIGINAL We wanted to update readers on our long Apple (NASDAQ:AAPL) trade. For readers that have been following ChartLabPro.com's articles and bought Apple on November 19 based on our Approaching Oversold alert (see below), you should be up roughly 12.5%. 

For those of you who have a shorter-duration time horizon, we would look to take off exposure in this trade.  We are looking to lighten up on exposure as we approach earnings.  We are looking for a $610 level to exit this trade, ultimately resulting in a 16% return.  This was nothing more than a reversion to the mean trade for us.

So, why $610 level?

Below the Apple chart we have the Standard Deviation above/below the 50-day moving average.  Apple is now .70 STD below the mean; if the stock reverts to its mean for this time period, we would be looking at a price objective of around $610, give or take $10. If you are a longer-term investor this exit may not apply to your objectives.


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