AAPL Follow Up

This is a follow up from yesterday's AAPL post

 AAPL fills all break away gaps. Yesterday AAPL gapped up to close lower, but not before making a new intraday high. Higher prices were rejected yesterday, however the breakout to new highs intraday would have certainly caused longs to jump in setting up a potential bull trap on an intraday head fake move. Lack of follow through today is not a good sign for longs, the fact AAPL is underperforming market averages today is not a good sign as was pointed out earlier. Of course we have to consider the possibility of a true breakout, however yesterday's action and today's do not support a real breakout and the parabolic-like nature of the price action since mid-December is also a sign of probably not much more then a short covering rally. The volume on the rally was rather low and there were no significant pullbacks, both signs of short covering. That would leave AAPL pretty exposed at such lofty prices with no underlying support other then short covering. Yesterday's volume was also the largest seen since the rally started, with a close lower on the day after making a new intraday high, this is not good news for longs in AAPL.

 This is an hourly chart with a linear regression channel applied to the rally. While a move out of the channel appears to be positive, a break from an established channel like this often precedes a reversal, it is a change in the character of the move which should always be noted for a possible change in trend. Should we get a reversal, $400 will be a psychological barrier because of the whole number as well as a  support level (because of the channel) that will likely see some volatility, if you are considering the trade, this should be considered as a target and your trade management should keep a careful watch on the area.

 My Trend Channel on a 60 min chart has held two legs in this trend very well, it is now turning laterally rather then moving up (another change in character)  and the long stop level is $421.25, this would also signal a likely reversal, especially is the channel is heading down which it should.

 There have been 3 sell signals on the daily chart, the first two were right on.

 Short term 3C 2 min has gone from trend confirmation to a negative divergence starting yesterday, it is currently in leading negative position.

 The 5 min 3C chart shows where the first leg of the rally saw resistance (as mentioned below the Trend Channel chart ), the current negative divergence is quite a bit bigger and occurred at the breakout to new intraday highs. The idea would be selling/short selling by smart money on demand from longs buying on the new high breakout which later failed.

The 60 min chart shows confirmation early in the move, however the second leg of the move appears to have been under distribution, this would make sense in the 4-part cycle (accumulation, mark up and at the 2nd leg distribution into demand, the 4th stage is decline).

If you are interested in an AAPL trade, you might initially think of it as a swing trade and see what it becomes, a stop can be placed a few percent above yesterday's intraday highs.