APPL, Get Yourself a Good PriceHello This week we are breaking down the MAG7 starting with Apple.
This analysis is an aid to help you:
1 Find good price to add to your long term.
2 Hedge your current position.
3 Make a swing trade (we will touch on options pricing as well).
Currently Apple is 1 of 5 of the MAG 7 that had not gained a new high since Trump and the tariff scares. Many analysts have given their predictions on where Apples fair value lies and these vary. What they will not tell you is where the institutional buyers and sellers are. Not to worry, this is where we come in
Big Buyers and Big Sellers
On the chart in front of you, take a look at the 3 different buy and sell zones (otherwise known as supply and demand zones). We find these areas in using a system similar to "imbalances" if you are familiar with the footprint chart, or orderflow. If you had no idea what any of that means, not to worry, I've done the work for you.
-The lines represent the fringe of real liquidity . Using this we will be able to help you find how and when you can find a good price for your long term.
- Buyers/Sellers: strong motivated liquidity.
- Extreme Buyers/sellers Extreme demand, this is an area you could consider a steal.
1 How do you find good pricing?
Simply put - Buy with the buyers and sell with the sellers.
If you are wanting to add to your long term here are the prices. Do you want to get in ASAP? or are you willing to wait for what could be a great deal. This is important as the end of the year can greatly depend on not just picking a good stock, but finding a great price.
Buying
Fair - 192
Good - 188-187
GREAT - 180-169
Now if you are in, and maybe you want to hedge the downside (you can do this by shorting the stock, or buying put options (even more in depth you can do spreads).
For now we will just focus on Buying Put options and taking profit for swing traders.
The Burgundy line "bottom of supply" previously rejected this area twice before (May 1st, and May 14th). July 7th marks the 3rd rejection. It's important to note that the last test pushes a new high, this shows a bit of weakness from the sellers.
This weakness suggests we may see the 218-225 Sellers get tested before it comes down. The question is, How strong will the buyers be coming into this zone.
If they are aggressing this area with new REAL buyers, Then we may see this run through all these sellers and continue to run until the 245 area. If we do not find real buyers here, then likely we will reject to the pricing marked previously.
If you are holding APPLE, you can look to hedge with puts at the end of the 220-223. Since you are looking at about 5-7% downside from apple if the sellers are strong here, look to only spend 2-3% of your apple worth on puts. look for maybe 2-3 weeks out if possible.
Secondly if APPL does make a bull run to 245 you can mark this area again to hedge short term puts. look for 8-10%+ downside puts 3-4 weeks out (roughly 3-5% of your apple size)
Hedging can be very useful in wanted to keep your long term and navigate some of the ebbs and flows of the market. Notice that the risk of your puts, 2-3% & 3-5%, is half of the expected reaction from these areas. if you get a big rejection, expect these options to pay well.
NOTE: If you do not understand the implied volatility (IV's) change the price of options, it is recommended that you stay away from options until you have sufficient experience. It's also important to know how to find a good strike price, and how to know if you are getting a good price. I will be breaking down options pricing in a different time.
That's all for Apple, Stay tuned for the rest of the MAG 7!
