The Apple (AAPL) Red Dog Reversal: Where Will it Lead?

Before-and-After: Today’s 80/20 Red Dog Reversal trade in AAPL

Before the market opened today, Apple (AAPL) was trading all over the map. It dropped as low as $496 before rallying narrowly into positive territory by the open. After very heavy action in the stock last week, it was hard to have an edge either direction. Without a clear-cut set-up, it was hard to short a stock that was down $50 last week, but also hard to get long such an under-performer. The new point of reference was $505.58. AAPL saw a quick push lower through that level, and turned into an 80/20 Red Dog Reversal strategy when it traded back up through it. Stops were then placed at the morning low of $501.23. The chart below was tweeted around 11:00am ET to alert traders about a potential reversal. The key for AAPL today was its ability to build on early morning strength.

(click to enlarge)

Apple showed commitment throughout the session on a 5-minute chart. The first entry was $505.58 and once AAPL held above that level, it gave traders another entry once it broke above the flag pattern at $508. AAPL closed the day on highs, up 1.77% and in the gap from Friday that started at $518.13. Today’s action is constructive as it relieves some of the oversold pressure on this stock.

(click to enlarge)

The AAPL Red Dog Reversal provided a great cash-flow trade, but what will it lead to? The stock now needs to now build on that intra-day strength and show commitment on the daily chart. At this point, AAPL is a broken stock and has a lot to prove going forward. Tomorrow’s action will be key to judge the overall validity of today’s move.

(click to enlarge)

By Scott Redler and Victoria Haddow

Disclosure: Scott Redler is long AAPL

Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!

About Scott Redler 367 Articles

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader.

Mr. Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Mr. Redler moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, continued to trade actively while working closely with all traders in the firm to dramatically increase performance.

Mr. Redler has participated in more than 30 triathlons and one IronMan, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business, Bloomberg, and he is a regular contributor to Minyanville and Forbes’ Intelligent Investing blog. He has been quoted in the Wall Street Journal and Investor's Business Daily, among other publications.

Scott received a B.B.A. in Marketing/Finance from the State University of New York at Albany, graduating Magna Cum Laude from Albany's School of Business.

Visit: T3Live

Be the first to comment

Leave a Reply

Your email address will not be published.


This site uses Akismet to reduce spam. Learn how your comment data is processed.