The world’s favourite tech stock is about to soar… again.
Last Friday, our LeadingTrader TrueWealth system alerted us to a “buy” signal on Apple (AAPL).
The last time this signal occured, AAPL jumped by 18% in a month.
Take a look at this chart…
Our Leadingtrader TrueWealth system shows that Apple stock has just broken above a key trendline (the downward sloping red line).
But what does the chart signal mean?
The yellow arrow is pointing to a blue price bar that we call a blue “progression bar”. It is designed to reduce market “noise”.
The blue progression bar is also followed with “velocity”. This is the green dot you see below Friday’s price bar. Velocity shows that there is “weight of money” backing Apple’s upward move.
If we buy AAPL here, we have an upside target at $123. This target is based on our TrueWealth mathematical principles.
Take a look at what happened to APPL when we had exactly the same setup back in October of last year:
You can see that AAPL skyrocketed soon after the buy signal in October. Within a few weeks AAPL jumped from $102 to $120, an increase of 18% or 1,800 points!
That is a risk reward of nearly 4 to 1. So if you had risked $500 on this trade, you would have made $2000 profit.
The current trade setup we have on AAPL at the moment has a reasonable risk reward of 2:1. We can buy AAPL here with a stop at $108, and a target at $123.
However, there is something interesting I want to point out on the first chart of APPL (above)….
Notice the numbers on the first chart. These numbers are “Elliott Waves”. “Elliott Wave” is a leading indicator which looks at the behaviour and psychology of the crowd.
Right now, Elliott Waves are telling us that AAPL investors could push gold beyond our projected target of $123. If the “wave count” is correct, we could see AAPL go to $132 (which is Wave 5).
That would be a 1900 point move or 17% return from here!
If we are wrong, we have a stop-loss at $108 to protect against risk.
The fact that the Nasdaq index moved higher last week is a good sign for Apple because Apple is a big component of the Nasdaq.
One important thing you need to remember is this:
Apple is releasing earnings on 27th January. If its earnings expectations are met, we should see its price jumping higher. However, if the earnings are disappointing, we could see the price plunge.
So be careful. The volatility this week could be strong.
If you wish to hold AAPL stock through its earnings on 27th January, start with a small position at first to minimise risk. Then gradually add to your position later, after the earnings announcement.
Alessio Rastani is a stock market trader at www.leadingtrader.com