It’s time to buy Apple—I’m playing for $140: Trader

Why this trader is still buying Apple

Apple shares are up 16 percent in the last three months, far outpacing the broader market. But rather than taking that as a sign that the tech giant is overstretched, Todd Gordon of TradingAnalysis.com says the stock's impressive outperformance is his reason to get in.

As the market as a whole pulls back a bit, "we want to be shopping for stocks that are stronger than the broader market. That's how we really get involved with the trend at the larger time frame," Gordon said.

The technically minded trader notes that while the is a bit below its 2014 highs, Apple shares are well above those highs, indicating that "this is a significantly stronger stock."

In fact, Gordon says that those 2014 highs around $120 previously served as resistance for the stock, and now mark an important level of support. That is, he believes that Apple will see fresh buying interest whenever it falls to that $120 level.

Indeed, on Thursday, the stock hit a one-month low of $121.63 before turning higher.

So to construct his trade, Gordon is buying Apple at current prices, with a "stop loss" at $121.50. That is, if Apple shares fall back to or below that prior low, he will get out of the trade, reasoning that the "support" level he identified has been broken.

"I'm going to consider that this low in the Apple chart has held, and we have established a base. If our thesis on Apple is correct, with a bouncing stock market, I don't want to see Apple break below that [level]."

And how high could the stock rise?

Gordon advises taking partial profits once the stock rises back to all-time highs of $133.60. And the trader wouldn't entirely exit the trade until Apple reaches $140—13 percent above Monday's opening level.