Monday, September 08, 2008

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

If a stock gaps up into an obvious resistance level and starts printing red, it's a good fading opp. AAPL set up perfectly on a break of $164.00.

JOYG was a gap continuation play from last week's earnings gap.

Trading pairs - AAPL and RIMM have been trading in step lately as are JOYG and BUCY.

4 comments:

Rick said...

Have you noticed how the inverse relationship with oil and the indexes has broken down over the last few days? I'm not sure if this is just because the Fannie and Freddie news / employment data is more important or if sentiment has shifted to where lower oil is a reminder of shrinking global demand and possible global recession.

Good trades. I was distracted by the Frannie news and didn't make any trades today.

Dinosaur Trader said...

I've been trading that BUCY and JOYG a lot. I'm looking forward to the bounce at this point... also SGR, even though it's not exactly the same.

-DT

Jamie said...

Rick,

Inter market relationships are not my forte, so I just stick to simple relationships as outlined by Murphy. He says that normally there's an inverse relationship between commodities and bonds; a positive relationship between bonds and stocks; and an inverse relationship between the USD and commodities. Over the mid-term, these relationships hold up, but the last few days things are off. Volatility is up since beginning of Sept. Not sure, but maybe the FRE/FNM bailout is exacerbating the fear factor.

Jamie said...

Hey DT,

I also include SGR, MDR, FLS, and FWLT in that group, although, as you point out, they're not all quite the same, but they do seem to trade with oil, and in general, they're more orderly than oil. BUCY holding support EOD, but JOYG looks like it has room to move a little lower.