Broad AAPL Update

I am going to go in to some different timeframes and long term/short term aspects of AAPL, I would like to go in to the MSFT growth story vs. the AAPL, believe it or not, MSFT's was much stronger until certain events took place including the declaring of a dividend, then MSFT became a blue chip, mostly range-bound dividend stock, but the growth story had long ended. If you take the time to look at the MSFT template, you'll see AAPL is following in the exact same footsteps, but that's analysis beyond the scope of this post and best done by yourself to see and learn the lessons and hallmarks of this kind of transition from growth to blue chip. AAPL being recently included in the DOW Industrials should not be overlooked within the purview of the preceding comments.

As for AAPL and some longer term fractal concepts that can be applied to any asset, any timeframe...

 This weekly chart of AAPL shows 2 trendlines, the first a lower degree of incline, at the yellow arrow price peeled away from the trend which is a warning, however we must consider the timeframe/trend we are dealing with and this is a large weekly trend (each candle represents a week). At the second, steeper trendline, price once again peels away to the upside, ironically right in the area of our current lateral triangle, another warning to AAPL's long term trend. I show these just as introduction to the concept that often leads to channel busters and the like in various tiumeframes, but the overall increase in parabolic activity makes AAPL's price trend less and less stable, we'll see evidence of that below.

 This weekly trendline shows the first time AAPL peeled away from the trendline which resulted in a -45% retracement over 8 months or nearly half of AAPL's value at the time when AAPL was trading in the 700+ range, it lost 390 points in 8 months (remember this is arithmetic scaling rather than log).

 This long term 8-day chart's trend shows the importance of volume as it should ALWAYS rise WITH price as it did from when it added roughly 2900% from 2003 to 2008. Since the highs of 2007/2008 AAPL has added about 340% since. Even from the 2009 lows to present, AAPL has added about 1/3rd of the gains from the 2003-2007/8 period,  so you can see the arithmetic scaling distorts the actual percentage gains and the volume decreasing on the uptrend form the 2009 lows to the present, is a problem that was held at bay only by the F_E_D's QE. Remember times have changed, don't assume that the F_E_D based trend since 2009 was driven by a set of circumstances (F_E_D HIGHLY accommodative policy) that have changed and continue to change. It is a mistake to believe , "This time it's different".

I hope you consider this as part of volume analysis for your tool kit, I suspect you'll find it increasingly helpful as we move forward.

 The current triangle and the Technical concept of resistance being broken and tested as support as Monday's breakout from the triangle has returned to the triangle's apex to "Test" former resistance/now considered technical support.

This is a long term 9-day 3C chart showing accumulation of a stage 1 base. It may not look very large from this perspective, but that base is 2.5+ years long. At the green arrow we have 3C confirmation of the trend or stage 2 MArk-up. At the 2007/2008 area we have a clear negative divegrence and an AAPL pullback of roughly -60%.

There's a clear and exceptionally strong leading negative divegrence currently, remember this is a 9-day chart.

Just as a form of independent confirmation by one of the most well respected creators of Technical money flow indicators, actually creating the first one, "TICK VOLUME" which rather than get historical credit for, he sold to Wall St. firms to use, Don Worden and his flag-ship creation MoneyStream below...

 This indicator is vastly different from 3C and would not share the same signals if there wasn't a true divegrence of distribution in the long term flow of funds in AAPL.

I have labeled two Primary trend cycles with stages 1-4 and a Secular trend cycle in Green from stages 1 (base) to 3 (Distribution/Top).

I think this divergence is very clear, probably quite a bit sharper to the naked eye than even the 3C divergence. Something dramatic has changed in the AAPL growth story as it goes from a stock that EVERY fund must have to a stock that some of the most well respected funds are selling in totality.

This is the same chart without my drawing on it.

As to the near term or tactical view considering the above charts as long term strategic trend, remember the current triangle posted above.

I still believe AAPL will breakout as anticipated last week and likely act as a proxy for the market in some sense although the market generally has lost much of the support available as of last week on a shorter term basis.

As to AAPL specifically...

 4 hour distribution at the triangle in AAPL,  this chart tells us what the highest probability outcome of any shorter term signals will be. For example, short term charts with positive divergences and breakout signals can and will still breakout, this just tells us that it is highly probable that those breakouts will fail and not be able to hold their ground.

Thus strategically we would want to consider AAPL a short set up in to price strength if other signals suggested a breakout attempt. While the larger strategic trade plan would be to short that price strength and maybe even ride it up on a short term piggy back trade (long), we always want to confirm that the original shorter term charts that projected a breakout confirm what the longer term strategic 4 hour chart is telling us by showing us the proof of distribution in to a breakout/higher prices, this is how we have the highest probability trade at the best price, the least risk and the best timing.

THIS SORT OF STRATEGY REQUIRES PATIENCE WHICH MOST TRADERS DO NOT HAVE (as they try to make back losses quickly and often recklessly or try to force a trade when the market is telling them to stand aside) , HOWEVER IT IS NO DIFFERENT THAN AN AMBUSH. 

WOULD YOU RATHER BE THE ONE AMBUSHED OR THE ONE SETTING UP AND EXECUTING THE AMBUSH FROM A PROBABILITIES PERSPECTIVE?

 The long term 60 min chart with the AAPL price triangle (at the yellow arrow) is an enticing long entry even for a short term swing trade that we know is highly probable to fail, but that's why it's called a piggy back trade, we ride it until the charts tell us it's time to get off and change positions. You can't be in love with a stock and show the kind of discipline necessary to execute trades like this. It's easy to be caught in the lure of a successful trade initially and forget about what the probabilities are telling you especially because most traders have an inherent bias toward trading from the long side.

I personally can see why some might take this long trade, I myself would not and rather be patient and wait for the larger set up to unfold, this is because I don't see the kind of support in the market I would want to see being the broad market is responsible for about 2/3rds of the directional influence on any given stock. As I showed last week, you start with market probabilities and work your way to sectors and then to specific stocks or ETFs, most traders look for stocks first and hope the market cooperates, this is like looking at and trading from a 1 minute chart with no knowledge of the bigger picture, it's backwards, but it is the dominant theme among technical traders which is based in pure and simple laziness.

 The 30 min AAPL chart. The first positive divegrence is part of forming the triangle (to the left), it is the two to the right that have been part of our most recent forecast from last week using AAPL as a market proxy. The yellow area is Monday's breakout of the triangle.

 This 15 min AAPL chart (yellow represents the price triangle) shows the first divegrence at #1 which is part of forming the triangle and the second at #2 which is a "W" base and the divergence the breakout is based on or was.

 10 min showing the positive divergence, the actual accumulation is not through the entire length of the white arrow, but specifically at the white box where the "W" base is. The orange arrow up is the breakout attempt NMonday and the horizontal orange arrow is a near negative divergence, not quite as 3C does make a higher high, but not by much.

It's the most current pullback leading positive to the far right that still suggests AAPL moves higher from it's breakout Monday and pullback to the triangle's apex since.

 This 3 min chart shows the accumulation of the "W" base at #1, the negative intraday divegrence at the breakout from Monday resulting in a pullback since and the current positive as seen above on the 10 min chart.

The 5 min chart shows again the first accumulation and then distribution to the left forming the triangle. As I said last week, "THESE TRIANGLES ARE NOT COINCIDENTAL, THEY WERE SPECIFICALLY AND PURPOSEFULLY FORMED".

The "W" base for the breakout is obvious as is the shorter term distribution on 3 and 5 min charts sending the breakout on a pullback, although distribution was not so strong as to show up on a 10 minute chart, although close.

This would suggest that we still should expect a breakout. This is the highest near term probability, however there is a difference between a probability based trade and a HIGH  Probability, LOW Risk trade. I don't like to trade based on probabilities alone, but rather excellent high probability entries with low risk, I don't see this as that kind of trade, although I wouldn't blame anyone for taking it as my risk tolerance for these kinds of trades has faded over the years as my patience has grown.

I WANT TO CONTROL AS MANY FACTORS AS I CAN AND ONLY STRIKE WHEN I SEE OVERWHELMINGLY STRONG PROBABILITIES FOR SUCCESS.

As for longer term Trend Channel based stops which will tell us when AAPL's character has truly changed...

 a 5-day weekly Trend Channel that has held the entire 2014 and 2015 uptrend without a single stop-out. The current stop level which "may" move higher is $118. Once $118 is broken, the trend change chances for AAPL increase significantly.

This Custom Trend Channel is the first indicator I received an award for and self adjusts to each particular stock's own character and most recent behavior unlike trendlines or different channels like envelope channels. The Trend Channel takes on the character of the stock and changes with it and only stoops out when there has been a change so drastic that the entire character has changed.

The Secular trend in AAPL represented by a quarterly chart (each bar represents 1 quarter or 3 months of trade) shows a bearish tall upper wick on the most recent candle and has held the entire AAPL uptrend with a current stop at $75, although the Trend Channel will continue to lock in gains so next week it will likely be higher than today, but once $75 is broken (as of the current stop), AAPL's growth story is over.

I'll continue to update you on both near and long term trends/trade set ups in AAPL.