Here’s why I’m short KLAC and AAPL
KLATencor
(
KLAC |
Quote |
Chart |
News |
PowerRating) recently formed and completed a head
and shoulders reversal pattern, dipping briefly under 50. Since then, it has
bounced back strong, even making a new 6-month high just over 55. As it pushes
forwards, we can’t help but see another potential head and shoulders pattern
forming.
As illustrated below, KLAC formed and completed
one head and shoulders pattern, and is now beginning to form another. Is it time
to sell?
First, remember this: Before we can
expect KLAC to break down into a new downtrend, we must first see it break the
neckline formed in the head and shoulders pattern. As you’ll notice, the
neckline from the 1st head and shoulders reversal pattern is the same neckline
the 2nd head and shoulders pattern forms around. KLAC longs should be safe until
that neck line breaks (approx 52.00).
Once this occurs, you can bet KLAC
will drop at least $2, testing support at $50 once again. Until the neckline
breaks, you should be okay, but once that happens, sell sell sell!
Apple Computer
(
AAPL |
Quote |
Chart |
News |
PowerRating) has had a heck of a run, but there
are signs that it is coming to a close now. AAPL has officially put in a head
and shoulders formation, one of the most reliable indicators that a stock’s
trend is about to reverse. Take a look at the one year chart and you will see
what I mean.
With the neckline at around $71 now officially
broken, the head and shoulder reversal is complete, and AAPL should be looking
at a fairly severe drop from these levels.
Look for opportunities to short sell on a retrace
to the neckline around $70-$71/share, especially on low volume. The target on
this stock trade should be around $56, with a stop that requires AAPL to breach
the $75 level before forcing you out of the trade.
DaytradeTeam traders will look for optimal entry
points for swing trades as well as bearish option spreads over the next few
days.
Andy Swan created and
co-founded DaytradeTeam five years ago on a principle of empowering
individual stock and options traders with the techniques and analysis methods
typically reserved for elite professionals. His expertise in technical analysis
and commitment to educating members earned DaytradeTeam a top-ranking among
advisory services for several years.