Ask The Trader: AAPL… What Do I Do Now?

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Abdul from Washington, D.C. asks, “What should I do with AAPL?  I bought it at $502 in October of last year on your call, so I’m sitting on pretty nice gains.  My question to you is should I sell now or try to hold and take advantage of the split?  Do you think it can make it back to the old high?”

Hi Abdul…

Nice purchase… I can’t tell you what AAPL is going to do.  No one can.  From all appearances, it looks like the stock will not only make it back to the all time high, but exceed it in short order.  That said, as always with stocks… anything can happen.  Price could for example:

  • continue its meteoric ascent up to and through the old high or
  • continue to the old high and stall before pushing through or
  • continue to the old high and go sideways for days/weeks/months or
  • continue to the old high and reverse lower or
  • stall here at the April 2012 high before resuming the upward trek or
  • stall here at the April 2012 high and go sideways for days/weeks/months or
  • reverse here at the April 2012 high and go lower or
  • some combination of these.
  • do none of these and do something entirely different.

My suggestion?  Let the price action do the talking.  I did just that last year when I went from viewing the stock in a bearish light in September to seeing a potential explosion higher in October (the call to which you refer).  I would adjust my stop (and you do have a stop) so that I protect some portion of my gains (how much is completely up to you) and let the stock continue to work.

There is also the option of scaling out of some portion of your position (locking in a bit of profit by selling some of your position).  This is what I would do when the option was available (I have no position in AAPL).  This approach is pragmatic and, just as important, can help you avoid trying to “top tick” the stock.

Hope this helps.

Good trading.

 

 

 

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