Apollo Education Group was founded in 1973 by Dr. John Sperling and went public in 1994. University of Phoenix is their flagship institution which is a very popular program. I thought about attending University of Phoenix a very years back for my masters degree. Then I discovered trading. Safe to say, I likely won’t get, receive, or need that degree.
I personally didn’t even know of this stock until a month or so ago when I met a new friend by the name of Ray St. Germain. I had the privilege of working with him for a period of time and although he had never traded before he was interested. He wanted to learn how to trade and your BOY (me) wanted to help him learn.
APOL was the first stock he pulled up because that’s where he used to work. He drew some truly impressive lines on APOL. In fact, one of them was an incredibly strong support at $24.23 that you can see on the chart. This is a price area created from a double gap, which creates a very strong support or resistance, depending on where price is in relation to these ‘semi rare’ double gaps.
You’ll notice how well APOL bounced off of that price, which is also nicely above the 100-day and 200-day simple moving averages. Earnings were announced on 1/8/14 on APOL and a nice size gap was created. On 1/7/14 APOL had a black candle. It appears the stock on 1/8/14 will open a close above the close of the prior day, with 1/8/14 being a white candle. This is a really strong bullish indication, along with the gap, increase in volume and the location.
APOL appeared to be in a long term accumulation phase since back in November 2012. Then public participation came in, ‘metamorphasizing’ into a gap, back into another sideways distribution phase. Another gap up shows a strong move on APOL and likely this stock is back into a public participation phase. If the stock closes above the current strong resistance of $30.53, a stop could be placed in the gap, around $28.72 and at this point the next target would be the resistance around $40.51.
COVERED CALLS
The stock could totally take its sweet time getting there. But that would represent a 30% increase in stock value, with less than a 10% risk. 1:3 risk/reward ratio, boom! And by this time, I’m sure you know how much I like covered calls. This stock is semi volatile, so it pays good covered call premium. So when/if this stock begins to rest and trade sideways, a covered call (on 100 shares or more) can be sold to lower the dollar cost average of your purchase.
I like this trade, I like the set up and I love the momentum of the market right now. Let’s mitigate our risk on this one!
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