Apple's chart points to trillion dollar valuation by year-end: technician

Apple could soon surpass a major milestone, according to TradingAnalysis.com founder Todd Gordon.

Looking at a chart of the tech giant, Gordon points out what he describes as a "very strong" uptrend going back to the summer of 2016. Drawing a parallel channel line leads the technician to conclude that Apple could rally to meet the top line or the parallel channel, which sits at around $200.

That's a nearly 14 percent rise from current levels and would put the company market cap north of $1 trillion.

"At that point, technically speaking, we would be considered overbought. But for now, we can use that for the upside target [through the end of the year]," he said Thursday on CNBC's "Trading Nation."

What's more, Gordon pointed out that on a day where the broad markets posted their worst sessions in two weeks, Apple emerged relatively unscathed.

"Apple's showing some pretty good relative strength in this pretty good pocket of volatility we're seeing here," he said.

Given his bullish stance on Apple, Gordon wants to buy the December monthly 180-strike call and sell the December 185-strike call for about $1.23, or $123 per options spread. This means that if Apple were to rally and close above $185 on Dec. 15, then Gordon could make a maximum profit of $377 on his trade.

But if Apple were to close below $180, then Gordon could lose the $123 he paid to make the trade. So that he doesn't lose the entire premium paid, Gordon establishes a point for him to stop out of the trade.

"Let's go ahead and stop out of the trade at around 61 cents or around 62 cents of premium remaining to contain the risk on Apple," he said.

Shares of Apple closed down slightly at $175.88 on Thursday. Apple is up 52 percent year to date.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect