AAPL Trade Set-up

This is essentially a re-iteration of yesterday's AAPL trade set up in the post, AAPL Update.

The Q's are underperforming and it was obvious they would as their divegrence (positive) is essentially not there. The only thing that has the Q's in the green is the fact they are drafting the broad market, but that can't and hasn't held recently as there has been massive differences in relative performance which would be a bright red flag if I were long the market.

The Q's only real hope to improve relative performance as the worst performing of the averages on the day(as expected) is for their most heavily weighted component, AAPL, to drive them higher as it has done in the past week or so.

Thus if AAPL makes the move above the triangle pointed out yesterday it will not only give us a much better entry by nearly 4%, which is also much lower risk by at least 4 % which for my risk management allows either a wider stop which I prefer on trend reversals or a larger position as risk per share drops significantly allowing me to carry more shares at the same risk level. This is why I want to see AAPL above the $119 area for a potential short trade or at least 2 of 3 good reasons.

Don't forget to set price alerts if you are interested.

At present I think there are better trades than AAPL =if I have to decide where to best put my resources o work, but on such a bounce as explained yesterday and above, AAPL becomes much more attractive, however I still see it as a swing trade for now and not a longer term core position as AAPL transforms from a growth monster to a blue chip, more stable income stock like MSFT. Look at MSFT over the last 20 years for the blueprint of AAPL.

 AAPL's gap down this morning saw a positive divegrence that has sent it back up above yesterday's close, just in the green, but this isn't the trade set-up we were looking for yesterday nor today...

 The 5 min chart's overwhelming feature is a large negative divegrence sending AAPL down from Friday's close to yesterday morning's a.m. lows where a huge number of stops were hit right below numerous whole number/psychological levels such as $115, $114, $113 as well as the 30/60 min 50-bar moving average that has defined the trend since October. Thus the break not only triggered stops, but put in a more important "Change of character" which we can take advantage of on some intraday strength as this larger negative divegrence dominates the chart.

On a 10 min chart you see a relative negative changing initial character at #1, a leading negative warning of a decline at #2 and a stronger leading negative at #3, even with a potential bounce, this leading negative is SCREAMING to short AAPL in to price strength as the change of character has occurred, the trend is essentially broken. Navigate the volatility around this initial break and look for some price strength, that's AAPL's X-mas gift.