The long and short of it for Apple, Facebook
Remain objective and unbiased in this market environment.
In market environments like this, investors do not need to hear more warnings as much as they need more specific stock related information. I intend to point out both potential opportunities and risk controls in three of the 1300 stocks that we follow at Stock Traders Daily.
I have already advised clients to participate in the short side of the market, but I only advise clients to do that near market highs. I will soon stop allowing them to initiate new longer-term short positions. We do not chase the market; instead we short near relative highs and then wait for the market to capitulate. If the market continues to pull back we will be too far away from the high for me to authorize new longer-term short positions, and therefore we will be in our waiting mode. If you have any questions about this please let me know.
Today I will focus on two stocks that have been very important to investors recently: Apple (AAPL) and Facebook (FB). The summaries below are technical and are derived from our real-time trading reports for these specific companies.
Apple: When Apple shares broke below $640, a material reversal signal surfaced and it told us that the stock could fall to $520 in a relatively short time frame. However, according to our technical observations, $520 is not nearly as strong of a support level as $425. Therefore, our current technical observations for Apple tell us to respect $520, and to consider it a trading catalyst. If this level holds we could see a bounce back, but if it breaks do not plug your nose and hope for the best. If $520 breaks lower the stock could fall by another 20% without much trouble at all.
Facebook: Facebook is a stock that people are tempted to buy because they believe website traffic will soon convert to revenue, but trading a stock like this based on expectations is extremely risky. Instead, trading this with an unbiased objective, in other words trading instead of investing in it, can produce excellent results with very clear risk controls.
My current analysis tells me that the range between $17.64 and $24.42 is extremely attractive and buyers should be willing to buy the stock near $17.64 with tight stop losses, and short sellers should be willing to short it near $24.42 with tight stop losses as well. Either one of these can provide excellent returns, but the mindset is not one of investing in Facebook, but instead trading it. Longer-term investments would require Facebook to first breakout of this range.
We cover 1300 stocks at Stock Traders Daily and if you would like a real-time report on a stock that you own you can get one for free. We also offer unlimited real-time stock reports to our subscribers.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
Here's a list of ways to profit from the potential move from defensive to cyclical stocks.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.