Breakout Trifecta: POT, V, AAPL

In my last post I mentioned Potash (POT), Visa (V), and Apple (AAPL), as potential breakouts in the next 5-6 trading sessions. Today was a great day in the stock market if you were long. Here are my trade updates for the day.

Potash

Potash closed above its resistance. That is what I expected (either today or Monday). So I’m glad I didn’t cash out yesterday on POT. I’m now up another 11% for a total of 27% on Potash since May 29. I don’t see any near-term reason to sell. I see another 20 points higher in the next 6 weeks. While it is not apparent in the chart below, my prior post shows Potash consolidating higher.

In addition to consolidating (price swings are narrowing), we also saw a nice MACD crossover.

“When the MACD rises above the signal line, the indicator gives a bullish signal, which suggests that the price of the asset is likely to experience upward momentum. Many traders wait for a confirmed cross above the signal line before entering into a position to avoid getting getting “faked out” or entering into a position too early…”

-investopedia.com

With the current (hopefully) breakout we should see another 20 points over the next 6 weeks. As a trader I may jump out and jump back in though if the price action dictates.

Visa

Visa hasn’t given me conclusive confirmation of a breakout yet. It is teasing me. It is slowly creeping up towards support. Today had a nice 2% jump. I won’t believe it is a solid breakout until I at least get a few sessions closed above resistance of $90. I give it 4 more trading sessions to get there. Today I bought a few Visa Dec 08 $80 Calls for $15.10. The position is up a marginal 1% for the day. As this stock creeps up towards resistance I may cash out if I feel the breakout is not going to materialize. Of the 3 stocks (POT, V, AAPL), this one is clearly still in the early setup. This one could go the wrong way just as easy as it goes up.

Apple

Sucking me in again
Nothing to say here. I’m still on the sideline. I’m not quite sure I’ll get the pop I need at the Worldwide Developer Conference. Everyone is expecting the unraveling of the “iPhone 2″ including GPS, perhaps some screen enhancement, a better camera, and an application store. Having said all that, there are some compelling reasons to buy.

Now that I think about it I just talked myself into it for the following reasons:

• Apple options are trading at a reasonable price right around its average volatility. Volatility expansion during the WWDC would give a nice short-term return. We haven’t had a crazy run-up like prior pre-product announcements.
• Shipping units are at a faster than projected run rate
• Will start selling in 50 markets
• The expanded iPhone market will ineveitably fuel longer-term Mac sales
• iPhone 2 will usher in a strong push into the corporate market
• Last, but not least… It’s Apple. Let’s face it. If you own a Mac you are a Mac Fanatic (myself included).

I will probably go for a longer term Dec/Jan in-the-money calls for safety (in case I called this wrong near-term). My real end-goal is to catch a short-term pop and sell as soon as they make everything official at WWDC. If I don’t get my pop, I don’t mind holding as a longer-term investment.

Find out tomorrow if I’m going to jump into Apple.