Apple Computer, Part 5: 04.15.2011

Is a weak Friday close a sign of weak earnings?

Next week is earnings week for AAPL. The weak close expected today could be a “tell.” The H&S continues to form. I am short two layers of AAPL, waiting to place the final layer at the completion of the top. The rally on Wednesday sets an excellent opportunity to lower stops on my entire current position to 336.31. This locks in a net profit for the short position of 200 shares per $100,000.

At this point I have zero risk on the trade unless the earnings report results in a strong up gap. This H&S top is classic in form, symmetry, volume profile, and behavior. The symmetry of the pattern projects a pattern completion for early next week. However, right shoulders can become extended.

It is important to remember that a top has not yet been confirmed. A close below 322 is needed to firmly set an objective of 280 to 285.

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