Don’t Get Caught in This Overcrowded Trade

[Trading With Larry Benedict]( Don’t Get Caught in This Overcrowded Trade By Larry Benedict, editor, Trading With Larry Benedict After peaking on July 19, Apple (AAPL) reversed, leading the broader Nasdaq lower… AAPL’s selloff was initially fueled by the Nasdaq rebalance and its disappointing Q3 earnings. That sell continued last month with the Fed’s confirmation that rates were going to stay “higher for longer.” Add in a bond market that’s been tanking daily, and it’s clear that the bears have had the upper hand lately. Yet whatever the market narrative might be (in this case negative), the last thing traders want to do right now is get caught up in an overcrowded short trade… And, with AAPL showing early signs of a potential rebound, today I want to see what’s in store for the market’s largest stock. Warnings of Overheating In the chart below, you can see that AAPL’s rally kicked off in January. The rally was a strong reversal from the year-long downtrend last year that saw AAPL lose over 30%. Apple (AAPL) [Image] Source: eSignal As the chart shows, AAPL’s rally coincided with two key bullish signals: - The relative strength index (RSI) rallied from oversold territory (lower gray dashed line). AAPL’s rally then continued with the RSI remaining in the upper half of its range. - The 10-day moving average (MA, red line) crossed above the 50-day MA (blue line) with both MAs steadily tracking higher. Recommended Link [Live from Miami – the crypto capital of the U.S… America’s Boldest Bitcoin Experiment]( [image]( “Watch me test a little-known crypto move, on the fly, and see how to make 10 times more money from Bitcoin… right in any regular brokerage account.” This works whether Bitcoin goes to $100k – or $10k! [Click here to watch LIVE demonstration!]( -- Despite its strong momentum, it took until mid-June for AAPL to recoup all of last year’s losses. And take out its previous all-time high from January last year. However, even before AAPL peaked on July 19, it was already showing signs of overheating… Take another look: Apple (AAPL) [Image] Source: eSignal Despite AAPL making higher highs (upper orange line), the RSI was showing declining momentum (lower orange line). This was a warning of a potential change in direction. And that’s what we saw. Coming off the back of its disappointing revenue numbers from Q3 earnings, you can see that gap lower after AAPL initially retraced. AAPL tried to rally again in August. But when the RSI rallied from oversold territory, it was unable to pull through. Instead, the RSI retraced back into its lower band (below the green line) where it continued to pull AAPL lower. Adding to the bearish sentiment, both MAs have been tracking lower since August. But with the RSI recently pushing up through resistance, what am I looking for next? Free Trading Resources Have you checked out Larry's free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. Emerging Uptrend When the RSI broke up through resistance in August, that caused AAPL to bounce. That rally stalled, however, with the RSI (momentum) unable to gain any traction in its upper band. And it’s the RSI action that I’ll be watching closely from here. We’re looking for the RSI to get a stronger foothold than August. Then we can expect to see AAPL’s emerging rebound develop into something bigger. But we need to note that it’s still early days with the move… The next test for a developing upmove is for AAPL to take out its September 5 high of just under $190. Beyond that, we’d look for the 10-day MA to cross and accelerate above the 50-day MA. This would serve as further confirmation of any emerging longer-term rally. Regards, Larry Benedict Editor, Trading With Larry Benedict Mailbag Have you been watching APPL? Let us know at feedback@opportunistictrader.com IN CASE YOU MISSED IT… [Man who Predicted “End of Cash” Issues New Warning for November 1st]( In 2016, former banking VP Teeka Tiwari warned: “A ban on cash is coming sooner than you think...and when it does, it will strip you bare of any privacy.” His prediction is finally coming true, and if you don’t prepare by November 1st… You could end up holding a bunch of worthless US dollars. [Click here to see this shocking new video exposing the government’s plan to recall the US dollar and learn how to prepare.]( [image]( [The Opportunistic Trader]( The Opportunistic Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.opportunistictrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. 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