Apple – Skinned the Cat since the Subprime Crisis





Aug 25 2007
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Ever since the subprime mortgage mini crisis ruled the U.S. financial news end of July 2007, every single stock was affected regardless of whether it’s financial or technology stock. And you should have noticed FinanceTwitter had stopped trading options temporary since then. Coincidently the housing problem blown-off at the same time of the earnings season and this only add more uncertainty to the stock market’s pulse. Even if I’ve identify some stocks which should be able to make some money as the research said the stocks should beat earnings and so on, the overall market sentiment is simply not aligned with the trading plan.

One thing I learnt throughout the journey of trading is that you should not force yourself to click that little poor mouse to execute trades for the sake of trading in the hostile environment. Yes, it was hostile as people just dumped their stocks and 3-digit index plunge was a norm. Hence, how could you possibly expect to make money if the external forces are going against your analysis and research? You need to follow the crowds.
apple 3 months profit chartThen an opportunity came when the Fed surprisingly lowered one of the two interest rates it controls and issued a statement expressing concern about the markets and the possibility of a downturn in the economy. That day was 17th Aug 2007 and the stocks direction reversed in totality, including one of my favorites, Apple Inc.’s (Nasdaq:
AAPL, stock). Looking at the 3-months chart above, it wasn’t until 21st Aug when the Apple stock crossed the support/resistance level of $125 per share that my trading alarm went off.

After waited patiently for some hours, I decided to enter some contracts after other indicators satisfied my trading’s requirement. It’s not easy to push the stubborn Bernanke to make such move and the feel-good factor should not fade so quickly. And there I was waiting for another three more trading days before I finally take the money off the table. It wasn’t an easy decision to lock the profit and run, simply because Apple had dropped so much – from the high $148 per share to $110 in less than a month since the eruption of subprime.
apple profit chartAt the stock price of below $135 per share yesterday, 24th Aug, I’ve to admit I was greedy and the mind was playing with me that the share could go higher. So I use the functionality of the trading tool to overcome my emotionset your selling price that you’re comfortable with and go to bed. Guess what, it got triggered and sold. I made my profit but when I launched the day-chart today, I kicked myself again (as usual) as the price went up higher thereafter.
apple's profitBut then with 39 percent profit in 4-trading days, I shouldn’t be whining. There’s always another trading opportunity, I keep reminding myself. As long as Steve Jobs is leading Apple Inc. I’ll skin the cat again. As of now, the $135 per share level should be an interesting point to watch.

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