Wednesday, December 27, 2006

Apple Computer, Inc. (Public, NASDAQ:AAPL) - Gap Fade

Nice call by Trader Mike on AAPL this morning. The Gap fade setup became obvious to me when the 6th bar closed on the OR high. Long on a break of the 6th bar high. My interpretation of Trader-X rules.


Prospectus said...

So until it closed above the OR high, you were waiting to see if a gap fade was the right idea?

Sorry for the boneheaded questions, but I just want to know what the important thing to look at would be. I would have taken the second candle as it broke the OR high, which would have been a mistake.

TJ said...

Hi Ex Engineer,

The answer to your first question is yes. I'm looking for a break of the OR high on a closing basis.

Trading the second bar was too high risk assuming a stop below the previous bar low. I was alternating between the 15 and 5 minute timeframes and the 5 minute volume pattern was telling me that AAPL was setting up as a long entry because volume was bullish on the long side. The next thing I look for on the 5 minute is a higher low, once that is confirmed, I look for a low risk entry that makes sense on the 15 minute timeframe.

There are no boneheaded questions. Trading is hard work and it's always difficult to figure out the best entry and exit.

One thing about this setup. There are will be some missed opportunities becuase of the low risk element.

Cal said...

I took the exact same trade, just with options. Very rewarding to be alert in the market! And what a nice rally it was today! Nice trading Jamie.

Anonymous said...

hi Jamie,
What's your initial stop? The low of the trigger bar? Thx


TJ said...

Thanks Cal. Nice work on the options.

Hi Lyn,

I set my stops just under the low of the previous bar. In this case my entry was on the seventh bar and my original stop was the low of the sixth bar. As soon as each new 15 minute bar starts, I move my stop just under the previous bar low.

Yaser Anwar said...


Good trade as usual. Just want to ask a question are all those red blue etc lines the various ranges you look for? Like the blue one close to 78 is the OR- which ranges do you have preset for your charts besides support/resistance?


I was wondering- maybe when time is not of the essence you could go over some of your best/worst trades since blog inception, this way I get to put them in my "TJ Greatest Hits" collection- thanks a lot!

TJ said...

Thanks Yaser,

The red line is my Esignal curser. I usually remove it before I post to the blog. The lowest blue line represents the November low which Trader Mike highlighted as a support area this morning. The next line is the OR high as you mentioned. The next line is $80.00 and it represents a key technical support/resistance area on the daily chart. Then I mapped out yesterday's close, as well as yesterday's afternoon high and low as price approached that area (see post above).

Re: the greatest hits package, that's very cute Yaser. Since you are by far the most prolific blogger, not to mention the most well connected, you might consider publishing a book - "Best of the Trading Blogs" :)

Yaser Anwar said...

ha ha! you're way too kind my friend, I'm no where close. By the way we should do a weekly collaboration on a stock- I'll do fundiz and you the technicals.

TJ said...

Sounds good. Let me know a day in advance and I will map out the technicals.