New Position: Apollo Group, Inc. – APOL

I haven’t had time to finish my research post yet, but that didn’t preclude me from entry into a new position. After checking into DeVry, Inc. (DV) this weekend, a similar stock that looked like a decent play was a bearish setup on Apollo Group, Inc. (APOL).

Both of these equitites have been doing quite well considering the recession currently going on with most of the rest of the economy. Academia is where people tend to flee to when they either can’t get jobs and/or are working to bolster their qualifications in a more competitive job market. However, it currently looks like both are primed for a little breather on their run.

APOL breakdown. Click to enlarge.

APOL breakdown. Click to enlarge.

As you can see in the chart above, shares of APOL gapped up at the end of October. It was a significant gap, as it hopped above the 60 mark, as well as all of its milestone daily moving averages. From there, the stock continued it’s ascent, including another gap up and a bit of a double-top at about 90.

Last week, however, things started to falter. We’ve now seen APOL break its upward trendline, cross below 80 and its 50-day moving average. Those are pretty clear bearish signs, at least for the short term.

Sticking with the notion of selling time I’ve been on so far, I decided to look at a bear call spread for a position on APOL. That resulted in selling a March 85 call and buying a March 90 call. I received a credit of .80 on each of 5 contracts, so I netted $379.51 after fees. My break-even is about 85.80, and I make 100% profit as long as APOL closes below 85 at March expiration.

My order went through at about 2:19pm yesterday. Here’s a 1-minute chart showing APOL yesterday:

APOL 1-minute chart on 2/24/2009.

APOL 1-minute chart on 2/24/2009.

Okay, those are the details. Will try to finish up research posts soon. Plenty of time left until expiration, so no rush. As a sneak preview, I’m looking at symbols, APC, PDCO, TJX, GE, ABT and FCX.

Happy trading!

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