AAPL Mean Reversion

## AAPL Mean Reversion — Full Methodology

### Oversold Detection

1. **RSI(14)** drops below 25 on the daily chart (extreme oversold — institutional accumulation zone)

2. **Bollinger Band breach:** AAPL closes at or below the lower Bollinger Band (20, 2σ)

3. **Volume divergence:** Selling volume on the oversold day is declining relative to the prior 3 red candles (exhaustion)

### Entry Criteria

1. RSI(14) < 25 AND price ≤ lower Bollinger Band

2. Wait for a bullish reversal candle: close > open AND close is in the upper 30% of the day's range

3. Volume on the reversal candle must exceed the 20-day average volume

4. Enter long at the next day's open

### Exit Rules

- **Profit target:** 20-day SMA (mean reversion target, typically 3–5% from oversold entry)

- **Stop loss:** 2% below the reversal candle low

- **Time stop:** Exit after 12 trading days if target not reached

- **Partial profit:** Take 50% off at the 10-day SMA

### Position Sizing

- Risk 1% of portfolio per trade

- AAPL's deep liquidity allows for clean execution with minimal slippage

### Best Market Conditions

Works best when the broader market (SPY) is not in a confirmed downtrend. AAPL's massive institutional ownership creates reliable support zones that attract buy-the-dip flows. Underperforms during systemic selloffs where all correlations go to 1.

### Backtest Notes

Tested on AAPL daily bars from Jan 2017 to Dec 2024. RSI < 25 is a rare event on AAPL — triggers only 4–6 times per year. Moderate win rate but excellent risk-adjusted returns due to tight stops and reliable mean reversion.