No Victory Laps

I'm a lifelong student of the market, not a guru, a learner. Therefore I don't take victory laps, especially based on after hours action. However I would like to point out the charts of AAPl showing the divergences, the short interest that was there in the beginning of September and nearly unchanged at the end of September. For all that think 3C wasn't doing it's job, it was showing you what was there, what was going on and if you think smart money was caught in this downdraft after hours, think again, it's more likely they perpetuated it. The flash crash in the SPY after hours was a pretty strange event to have occur wouldn't you say, especially after IBM had come out and gotten a real spanking, 15 minutes after the flash crash AAPL had it's turn in the wood shed.

Distribution of a large position doesn't happen quickly, it takes time and in a low volume environment (remember I told you the volume I think Thursday was the lowest in 190 days on the Dow) it takes even more time. The point is to buy at depressed prices and then they feed out shares into rising prices to come up with a good average gain.

After hours AAPL (which almost always blows away earnings, I can't remember the last time they didn't) was down -6.13%. IBM was down -3.31%. Even financials that carried the day were down in after hours.

We'll have to see how this pans out. While 3C shows the strength or weakness of a trend, I always want confirmation first. Today I thought FAZ was a good buy right near support and INTC I believe will make for a decent short sale.

The dollar as of right now has reversed yesterday's losses against the Euro and is headed back toward that region where I said the Euro looked like it had broken it's trend. 3C has been picking up on this the last week or so.

It wasn't easy to post the 3C charts showing distribution of AAPL because I know the game they play with earnings, but the objective chart is the objective chart. I owe it to you to give it to you the way it is and apparently it was correct in showing the major investments of smart money were being taken off the table as we approached earnings. There's been a "Buy the dip" mantra going around about AAPL even before earnings (just in case they disappointed), but I'd give 3C some time to see if that is what in fact smart money is doing or not.

QE2-whatever it is, seems (by Pimcos actions) to be largely centered on buying more toxic Mortgage Backed Securities-"Bail Out the Banks Part Two?". It seems they are going to need t sooner or later and probably sooner.

The Home builder Index came in strong, about a week or so ago (maybe a bit longer) I mentioned that I was seeing some 3C strength in Home Builders. NOW we know why. With title insurers hesitant or unwilling to write title insurance on Bank REO and foreclosure short sale properties, it seems that either private sales, of which there are not a lot or new construction is where potential home buyers will be looking-good for the home builders for a bit, so tomorrow we'll see who looks the best in that arena.

I can't control what smart money does, I do believe that 3C can show you. There have been a lot of instances of manipulation from HFTs to the Fed and Brian Sacks use of POMO to ramp the market, still persistent negative divergences have remained, just like the persistent short position that I'm 97% sure is largely smart money.

So tomorrow we go on, another day. I'll be out early in the morning but should be back in around 11 a.m. and I'll have some more ideas for you, especially as we work out our own nifty 50. Keep the ideas coming in if you have a stock you like.

Have a great week.