With so many traders’ eyes in social media and beyond on the likes of Apple, Google, Amazon.com, etc., it is worth going to what poker players call “third level thinking.”
Third level thinking was described on the twoplustwo.com poker boards several years back as meaning:
1st Level: Your cards
2nd Level: What does your opponent have
3rd Level: What does your opponent think you have
4th Level: What does your opponent think you think he has
5th level: What does your opponent think you think he thinks you have
Etc. Etc.
While Apple’s 50-day moving average was breached two weeks ago, the slope of that reference point continues to rise. The obvious thing to do was look at whether price was above or below it, not the slope of the 50-day.
The real subtle play was to observe the under-watched 100-day moving average (gray line below). Even though the financial media and many traders freaked out when Apple lost its 50-day, you can see that it has precisely held its 100-day so far, printing a hammer candlestick yesterday and decent follow-through today.
I am not trading Apple inside 12631, currently, though I do believe subtle strategies work best for stocks that everyone seems to be watching.
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