Okay, so I am busy cooking and channel surfing which is about the limit of my multi tasking abilities and the range of my remote when I stumble across a of a show called Options Action on CNBC. Excellent I think I could do with a laugh so I stop and watch for a bit…..it was so funny I nearly passed a kidney stone.
Any way there was some bloke on their lamenting that his recommendation for a short trade on Apple hadnt worked out. The fact that someone had recommended going short Apple did make my cup of tea come out my mouth and then I realised this individual must be a broker and lo and behold he is. Curiosity got the better of me so I fired up the google box on the old tablet and looked at the previous episode where he had recommened this trade thinking that it might have been in November when Apple pulled back from around $420 to $370 and such a trade might have been considered justifiable. But no….his recommendation to go short was made on February 10th.
To refresh everyones memory cast your eye over the chart below which is of said period and you will see a stock where price had gapped up only the day before the recommendation to go short. WTF?
Having a look on a weekly chart makes this decision to recommend that people go short even more stupid. The stock has been going up from $100.
This is why people simply cannot rely upon the sales side of the finance industry – they dont have a friggen clue. An objective look at Apple shows a stock making new highs on volume on both the daily and weekly chart – this is a case to go long. The fact that it has come from $100 is completely irrelevant – it may go to $1,000 you have no way of knowing when and where it will stop.
If a stock is in an uptrend you do not try and fade it using the excuse that you think it is a bit long in the tooth. What ever the hell that means.
But of course – Gaps always fill – until they don’t that is 🙂