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Close short position in Apple

November 5, 2012

05 November

The remaining two thirds of the short position in Apple (AAPL) is closed today, at the current price of $578.78. The reason is as follows:

Several recent examples (National Bank of Greece v. S&P 500 Index and utilities verses autos) have shown it wise to close positions on reaching an RSI divergence on the daily chart. Daily divergences are not rare enough to open positions but they can be used as trigger to take profit.

Whilst this has not been reached on the daily price chart, on pairs charts, some emerging market ETFs have bullish daily RSI divergences against Apple, for example: iPath India (INP) and iShares Mexico (EWW). In any case, Apple is very oversold against most stocks and ETFs on its daily chart.

Apple is not the best short position choice now. This does not rule out further decline eventually, something I expect to happen. In the immediate term though, taking profit makes sense.


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