Shares of Apple Inc. (NASDAQ:AAPL) are trading higher on Tuesday. The iPhone maker’s stock price gained almost 15% in just one week. But the rally may end or at least pause around current levels. The shares are overbought and at resistance. These can be bearish dynamics. This is why Apple is the Stock of the Day.
Many trading algorithms are based on statistics and probability theory.
The red line on the chart below is two standard deviations above the 20-day moving average.
Standard Deviations: A Statistical Concept.
According to statistics and probability theory, 95% of trading should occur within two standard deviations of the mean. If a stock exceeds this threshold, as Apple currently does, it is considered to be overbought.
