AAPL is always a good stock to keep your eye on, it is so heavily weighted on the NASDAQ, that it alone can often move the NASDAQ 100 intraday. Some days like earnings, it will be the fulcrum of the market, that one stock that can decide direction for the day.
Several months back NASDAQ re-weighted the NDX so I'm not sure what the weighting is now, by now it's probably on the internet somewhere or you can pat NASDAQ the $10,000 a year for their proprietary weighting schedule. Before they re-weighted, some math geniuses figured out the weight for AAPL on the NASDAQ 100, I can't remember if it was 19% or 22%, what I do remember is, if you added the weight of all of the bottom 50 NASDAQ components combined, that was the weight of AAPL. So hypothetically, if there were only those 50 stocks and AAPL and those 50 all closed down 1% and AAPL closed up 2%, the NASDAQ 100 would have closed in the green +1%.
That should get across the importance of AAPL.
Here's my twist on the Demark indicator that you saw for the first time in it's new format last night. Just to show the uncanny accuracy, here's a 3 day chart, long signals are given in 2000 for a 5 month move of 67%, another in 2001 for a 6 month move of 70%, another in 2006 for a 6 month 63% move if you took the pullback signal in orange (it pulled back 12%), if you had thrown it in my Trend Channel you would have made 123%. Then there were the 2009 buy signals which if you took the first pullback signal, you made another 75% in 5 months, or in my Trend Channel about 150% in a year.
On an hourly basis, it seems to be giving another buy signal in the area, you an see the last two and their respective sell signals. We are right in the area and with a larger signal then the last two.
The 1 min chart, which has worked beautifully, especially if you were fast enough to scalp trade (by the way, the signals it gave last night were right on, they ended at the 30 min mark, which was the last time frame this morning that had the SPY in the green. In any case, there's a 1 min signal and not much else until that 60 min chart, which is similar to the market and would imply to me that we gap down in the a.m., however, there's still that 60 min buy signal which would put a buy around 10:30, which is interesting as Bernie K speaks at 10 a.m. tomorrow. The first and last time he spoke after the FOMC meeting, he hinted at further monetary easing, which many took to be a reference to QE3. The very next day another regional FAD president spoke and said nearly the same exact thing. Of course he is speaking before Congress so it would be a strange place for a policy announcement, but who knows what he'll say that the market may grab on to.
AAPL 1 min is in a relative positive divergence and the depth indicator is extremely shallow. This is a relative positive divergence because 3C is at the same level when prices were about 28 points higher. We expect 3C to confirm downtrends if they are healthy downtrends by making lower lows with price, that is not what has happened here.
On the other hand, looking more closely at the 1 min chart end of day, we see a negative divergence around the $378 level which would not imply a gap up in the morning.
The 2 min chart is not only relatively positive, but leading as well. I haven't been using the 2 min chart that long to know whether it could produce a gap up.
A long term view of the 5 min chart shows it in a big leading positive divergence, the highest since before July.
And a closer look at the 5 min chart today has both relative and leading positive divergences. 5 min harts can gap the market up, but I wouldn't make a wager on it, if all 3 (1,2,5 min ) looked like this, I would say there would be a high probability of a gap higher.
The 15 min chart not only shows a relative positive divergence at the arrow (which is one reason as well as the depth chart below, that I suspected there's been accumulation going on throughout most of the move down sine last Tuesday. We also have a leading positive divergence.
Looking at the daily chart, here's an example of a head fake before a reversal. Note my long version of MACD and RSI both called a top. Also remember that big volume is often a reversal signal as you can see at the first two red arrows, think of it as a type of churning. The green arrow shows increased volume on a strong candlestick on the breakout day. One hint this was a head fake was the fact there was no follow through on that healthy breakout. Volume spiked again on the fulfillment of the head fake with prices falling back below the breakout area. The yellow box is the head fake and then came the reversal, this is seen in downside reversals and upside, although an upside reversal head fake would break significant support like we saw today in the market.
3C and the depth indicator both clearly called the top in AAPL. However, getting a little myopic, if you look at today's low compared to a similar low marked by the white trendline, 3C is higher, as in not confirming today's low which is actually lowed then the previous. I don't know if it will mean much for the longer term trend implied by a daily hart, but I thought I would point it out.
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