AAPL Poised to Move Higher Into the New Year

When AAPL pulled back to within striking distance of its 50 day moving average, it provided a great investment opportunity with a favorable risk/reward setup. Today we can see AAPL consolidating in a new upper range. We are looking at this setup as a possible momentum play into the New Year in anticipation of the window dressing that typically takes place. In addition to AAPL, its high flying tech peers--including BIDU, AMZN and GOOG--all appear poised for a momentum move.

It is essential to watch the important price levels in the stock in order to properly manage our risk. AAPL is not a buy until it can take out the $205 level. Once AAPL moves through $205 I will buy Tier One of my position (remember, I am buying if and only if AAPL can move through $205). Should AAPL then breakout to new all-time highs, I would proceed to add Tier 2 and ride the momentum into the $220 area. At $220 we can plan on selling half of our position, while letting the rest ride with a trailing stop.

Take a look at the chart for a visual of this trade setup.