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Wednesday, January 23, 2013

Post-Earnings Targets On AAPL

Sharing some of my homework here on AAPL -- doesn't mean it's right. It's just what I'm seeing at this juncture.

To me, AAPL looks like it could be forming a bullish falling wedge that would look best with one more marginal low.

Evidently, Mr. Fibonacci concurs, at least there seems to be some agreement in the patterns that projects a near-term resolution to AAPL's correction, and this agreement coincides with .618, the inverse of the golden ratio (1.618).

In the first chart, a common Fib extension tool using the 705.07 high, the 505.75 lows of November, and the 594.59 highs of December projects a 61.8% expansion target of 471.41.

Zooming in on price with a 240-minute chart, the same calculations are made using the 650.30 October high, the 505.75 lows of November, and the 555 highs of early January. The result is a 61.8% expansion target of 464.13.

Finally, the last chart shows a similar agreement between the last two down-up legs from 555, the recent 483.38 lows, to today's high thus far, 513.44 (subject to change). This yields a 61.8% target of 469.18.

These are not orthodox Fibonacci measurements. All I was looking for was an ideal target should a falling wedge come to pass because the potential upside is enormous. 471.41 to 464.13 is simply where three separate Fibonacci targets find agreement.

But wait, there's more: the 38% level drawn from the 78.20 lows of 2009 to the all-time high of 705.07 is 465.61. So that makes four targets.

If I'm wrong and Tom Demark's call for a bottom on AAPL the other day holds up, price could shoot to 540 post-earnings in an instant. I simply don't want to buy or sell it where it is presently.

Since I use options when I trade AAPL, I must wait until premiums are crushed down to a wholesale price level for my style of risk/reward trading.

These charts and projections merely attempt to give me an area in which I will do business.

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