Recall in my post Apple Trendline break back on May 4, 2013 that market leader AAPL had turned the corner on its massive sell-off from the $700 level which began in September of 2012. The shares have moved more or less sideways since then at one point selling off and re-testing the lows back to the $388 level but ending last Friday right at the resistance area of $465 - not far from where they were back in May.
Everything changed on Tuesday when the shares opened in at $471, quickly traded back to resistance at 468 then reversed and headed steadily higher. Then at 11:21 AM, Carl Icahn tweeted:
@Carl_C_Icahn - We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come.
That got the shares moving and by about 2 PM they were up in the 475 range. Then at about 2:21 PM, Icahn tweeted again:
@Carl_C_Icahn - Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.
That second tweet really lit a fire under the stock and it traded up $10 to about $485 within minutes of this tweet.
Twitter has been gaining prominence in the trading and investing community, but this was a first - a high profile billionaire activist investor releasing market-moving information via Twitter. This second tweet caused an increase of nearly 10 billion in Market Cap in just minutes.
The shares traded up to as high as $495 on Tuesday but settled back and closed just under the $490 area. John Carter came into the Simpler Options room on the close and recommended the 485/490 PCS for about a $2 credit. I didn't take the trade but he expected to see follow-through to the upside in the shares the next day.
Mr Carter was right and the shares opened at $495 on Wednesday and quickly traded up to $500 and bounced around that level for more or less the remainder of the week, hemmed in somewhat by Friday's monthly options expiration. Then in Friday's Simpler Options Trading room John put on a number of bullish positions in AAPL, expecting further follow-through and a gap up on Monday. I followed through as follows:
- Short the Aug 23 Weekly 500/505 put credit spread for a credit of 2.65
- Long the shares in both cash and retirement accounts
JC expects a gap up on Monday with a move quickly to the 513 area before consolidating and I am positioned for that to occur. Anything can happen of course, but JC's ability to see a high probability of continuation, and position himself in advance of it is one of his key money-making techniques.
One other take away from this week - Twitter has become a big and serious player in Social Media. With everyone from the Pope to President Obama to Carl Icahn using the medium, its no joke. As it turns out you can say an awful lot in less than 140 characters. More to come on the Twitter IPO.
Enjoy your weekend and the fruits of your labors.
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