Saturday, June 26, 2010

Still in cash...

I have been quite busy over the past few days. So I was not able to update my blog. Since my last post I have initiated no new positions and continue to be fully in cash. However, that may change on Monday.

With the markets selling off for five days in a row I am now even more bullish short term than I was on Thursday. Many leading stocks have now formed very attractive low volume bullish pullbacks. One stock in particular that catches my eye and that I plan to take a 100% position in is AAPL. AAPL is the quintessential CANSLIM stock. After launching one of the hottest tech gadgets around earlier this year, AAPL has once again managed to outdo itself by launching another blockbuster product, the fourth generation i phone. I currently own an i phone 2g but plan to upgrade to the i phone 4. Apart from the phone, I would also like to own AAPL stock. After watching it for months now I finally have what I believe to be a low risk/ high reward opportunity to get long of AAPL. Here is the chart with the white lines depicting the set up:

If you compare the charts of AAPL to that of the NASDAQ you will notice that both of them sold off pretty hard at the start of the correction in early May. However, where as the NASDAQ went to two successive lower lows AAPL formed to higher lowers and basically went sideways. Also while the recent bounce in the indexes did not even push the NASDAQ above its 50 day MA, AAPL managed to break out to new all time highs! Now with the recent five day pullback which has put NASDAQ near to recent lows, AAPL has consolidated in a nice tight low volume pattern just off all time highs. So one can reasonably conclude that if the indexes bounce here AAPL, given it technical and fundamental position is very likely to be one of the top performers.
My plan is to purchase AAPL as it crosses the upper trendline of the bull flag with a stop loss at the lower trendline with a preliminary target of $286.00. There are other stocks that I am interested in but AAPL is my favorite.

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