Wednesday, May 15, 2013

Apple: reversal ?

The analysis

It seems the long-term downtrend in AAPL could have ended and we may be seeing the beginning of a new uptrend here. That would be confirmed by AAPL holding its low around 385$ and, more important, making a new high above 470$. But the jackass in me has already jumped in at 427$.

Price action shows AAPL breaking its major downtrend line on March 18th, and retesting it successfully while making a new low around 385$, near the 50% Fibonacci retracement from the highs. My support stands between 420 and 430 (my exact support was around 427$ which is where I entered the trade). A negative here it that, while the prices are playing around the MM50 days, the MM50 stands well below the MM200 days which keeps falling.

In addition, the weekly stochastics have gone out of the oversold zone and rising, which is a sign of strength, while the daily stochastics are falling quickly and approaching the oversold zone. Finally, Relative Strength VS S&P500 (indicator labelled "RS (APPLE INC.)" on the weekly) is still showing strength.

All in all, a rather speculative bet, until new high is reached while preserving the previous low.

Bearish warning : a correction in global markets can happen anytime now. And the longer it takes to correct, the more violent that correction is likely to be.

On the fundamental side, I'm bearish Apple, as I've been saying for a while on this blog : Apple watch your back, Android is coming for you;)

The charts

AAPL weekly end of the downtrend? successfully retested previous downtrend line around 50% Fibo retracement, stochastics out of oversold zone, Relative Strength VS S&P500 still bullish
AAPL weekly end of the downtrend? successfully retested previous downtrend line around 50% Fibo retracement, stochastics out of oversold zone, Relative Strength VS S&P500 still bullish

AAPL daily, MM50 below MM200 and stochastics still falling but quickly reaching oversold zone
AAPL daily, MM50 below MM200 and stochastics still falling but quickly reaching oversold zone

Friday, April 26, 2013

S&P500 : Mini crash on April the 23rd

Not that Rock's last post was bad, but time for change I guess. Ok, these markets have legs. No need to prove this anymore. But what the hell happened on April the 23rd, between 1:08PM and 1:10PM, when the S&P500 lost 0,85% in a matter of 2 minutes ?

WTH was that ?

 Let's discuss.. guess it'll be between those ad bots and me! there can be only one.

BTW, support here is 1576 (previous high), then 1555, then 1520/1530. Above that 1576 level, previous high of 1,597.35 acts as a resistance (until proven wrong of couse!).

Ah and 2 last pieces of advice :

  • as always : don't you try to catch a top ;)
  • don't short a market that's trending up (and it means any stock, as nearly any stock will act accordingly to global markets). Or maybe just a small short position, to act as an hedge.

Thursday, April 12, 2012

Pullback Over?

Time to show some charts. First, my favorite market leader, the SPXA50, the number of SPY stocks trading above their 50 day moving average:

As you can see, we’ve had a dip in the numbers, and haven’t reversed the trend yet. The dip wasn’t as low as they usually go, which means it was a weak pullback. But it was a pullback. Since we haven’t seen the trend change, I suspect there’s more down to go. So here’s the SPY chart, and my humble analysis

As you can see, the uptrend since November was broken (as we would expect from looking at the 3LB chart at the top). The downchannel which broke out of November’s upchannel is about ½ as wide, so the standard deviation on the downchannel is smaller. This means it’s easier to break out of the downchannel. I believe the algos are trendfollowers, so when the breakout happens, look out for significant pops to the upside. You can see a large down day, and we’re trading within that day’s range, so until we get out of the inside bar, we won’t know the direction of the market. Today looks like up to me, so today we may break out of that inside day trading. If we get out of the downchannel today, I suspect we will continue the November’s upchannel. If we don’t then look for a down day Friday.

A couple of things to note on this chart: the downchannel begins on the day of the highest high of the upchannel. Of course, you don’t know it’s a downchannel until the breakout happens and is confirmed by a second day. This downchannel is really short, only one day of real confirmation, with high volume as well, but the next day the volume was average, so no continued confirmation. Second, the Stochastics are oversold, and turning up. To me, I read this to mean the pullback’s over, and we will close above 138.40 today. If that happens, look for a move higher into the weekend, and a pop for Monday.

The last chart I want to present is AAPL.

Note it’s strong resemblance to the SPY. Could be that a) AAPL watchers play other stocks based on AAPL’s performance and b) AAPL is a very significant component of the marketplace. I use AAPL’s trend as a leading indicator of the SPY. Combined with a few others, like XOM and IBM, you watch those, and they will tell you the tells.

So after I posted this, I though you might like to see what the bots are doing. They are clearly trying to support the market by moving AAPL upward. There is a lot of non-bot pressure on AAPL downward, but look at what's happening:

For reference, look at the green line I drew on the volume, and you'll see what the trend was before the bots. Then suddenly at 13:09, the bots took over and started to control the tape. The first one at 13:11 or so tried to eat out all the sell orders, and was effective for 3 minutes. The next one at 13:33 tried the same thing and was successful until 13:39. Then another buy at 13:45 was unsuccessful. Again at 13:51, we see another attempt, which turned out to be successful and stop the fall at 621.

At 14:03, the bots tried another buy to push above the support line at 623 (in red) but was unsuccessful. I suspect another down leg as a result.

You'd think the bots would run out of money, right? Not so. They can borrow at 0% interest.

Friday, March 23, 2012

Longer Timeframes

If you read the articles posted on the previous thread, then you will begin to understand traditional charting technologies are becoming worthless. As the market manipulators continue their intereference (HFTs) the market will over the short term do what they want. However, over the long term, they can't, because over the longer term, the pushing the market around won't work: fundamentals will cause the prices to move where investors feel they should be. Like today, the P/E for AAPL is much smaller than what many analysts believe it should be, so in the longer term, AAPL is likely to correct to the upside (buy on any pullback). Now, longer term trend following will make you money, not short-term daily trading.

So I thought I'd post a few charts in which we have some mutual interest. First, the SPY on the weekly timeframe:

As you can see, we're in an upchannel. This is the basis of Mutt's call that we will have a 2000 point run in the DOW. Now, in the shorter term, the SPY on the daily timeframe with the overlay of the weekly channel markers:

If the trend continues on the downchannel, we could expect a reversal where the daily downchannel intersects the weekly upchannel. However, being trend followers, we'll follow the downchannel daily trend until it breaks out. We may have to redraw the weekly upchannel, depending on when it decides to break out.

So here's the weekly SLV:

Looking at the weekly, I think we don't need to redraw the daily chart, it seems to be headed down to it's lower weekly downchannel, around 23 and change. However, if it breaks out of it's current channel, a new weekly upchannel would be drawn starting around Dec/E and upwards, incorporating our current downchannel trend. I previously commented that I might nibble on Silver, but looking at these charts, I think it's too soon to take it seriously. (I typically don't short anymore because of the costs to borrow the shares). The other question to seriously ask is why, when the overall market trend is up, is the SLV on a dwwntrend? SLV gets used up in manufacturing processes and catalytic converters, and unlike GLD, goes away unless the miners dig up more. You'd expect a long-term upchannel.

Anyway, because of the HFT's, I'll miss the daily and sometimes hourly moves. The reason my trades were losing money is that I would wait for a trend to be clearly established, and by the time I made my trade, the trend was over and the algos reversed the move. So I've been making longer-term trades, and even though the overall market is going lower, I've made 2.77% in 3 days. With much fewer trades.

Tuesday, March 20, 2012

Warning, Warning Will Robinson!

Double top in the down channel on the spy.

You can see where the downchannel created by the gap was broken, and an upchannel to try to fill the gap was started. The big gap down isn't likely to fill today. Turnaround Tuesday is almost over, so I'm looking for a pop overnight. Strength in AAPL, TIF, LGF, SOHU SPRD, SCO POT CLNE CHS WMB, NTAP.

Scary? not for me. my iPad 1 is still in my drawer.....

The chart was edited to include the fib retracement information. Should have included it because we know we have an 83% chance of hitting the first retracement line....

Getting old, it seems.

Anyway, check out PCLN, AAPL,QCOM, and VTR. The revenue stocks continue to do well. No pullback for them.

So I will expect a pop in the AM to fill the gap. Keep us in the horizontal trend trading range.

Thursday, March 15, 2012

AAPL Pullback

We saw AAPL hit 600 today.

It's just about it's own country, in size.

Here's the flag that's forming. Is this a bear flag or a bull flag? Was 600 a Bulltrap? Or after hitting 600, should we expect the country of AAPL to be more successful than ever?

I got out this morning, but am back in at 589.05. Will see.

Monday, March 12, 2012

Range bound or Breakout

Here's the chart. See the falling volume and the weakness in the MFI and Stochastic RSI. I'm looking for a Turn-around Tuesday (I think today's close will be higher than open, but I still lost money).

Falling volume like this can mean that the price isn't supportable. Meaning price should go lower.

It was pointed out to me that we could play the SPY as though it were in an upchannel like this:

If this is the play, it shows great weakness having broken the channel on the downside on extremely light and decreasing volume. In which case, it seems we should go lower and perhaps look for support points.

I don't think the second scenario will play out. There's too little volume and too many plungers. IMHO it's likely we will stay range bound until, as Mutt says, the market vomits and we go one way or another.