Market / AAPL Update

As AAPL seems to be the trigger to months worth of analysis, I'll be updating AAPL as well in the market update.

AAPL

 Friday's AAPL analysis and last night's both had me perplexed on one issue, here's last night's post and that issue was the Bollinger Band being so tight, it looked like a directional move was imminent which it was as we saw today, but the event that I would think would be most likely to cause a head fake would be going in to or on the day of AAPL's I-pad 3 launch on Wednesday. I couldn't quite figure out how the tight Bollinger Bands would allow AAPL to wait on a breakout until mid-week...


"as I stated in Friday's AAPL post linked above, I'd estimate that reversals are preceded by head fake moves about 80% of the time. AAPL being the most scrutinized stock and the most influential stock in the market, I theorized on Friday is going to give us a head fake breakout. "


"A couple of interesting events we have this week, Apple unveils the Ipad 3 on Wednesday, although the Bollinger bands are so tight, I don't think the breakout will wait for Wednesday."


As you can see below, it didn't... 

 In the yellow box we have an intraday head fake breakout in AAPL which led AAPL lower very quickly, this is the event that I suspect may be the timing cue for the market, but on a daily breakout, not intraday. Interestingly though, the bullish looking triangle (consolidation / continuation pattern) would likely have AAPL longs buying the triangle itself, not to mention the breakout earlier today. The failure of that breakout would have shaken out quite a few of those longs as we saw in AAPL's intraday volume today which would give Wall Street an easy way to accumulate in the wide open at better prices for an eventual real daily head fake breakout move. I say they could accumulate in the wide open because they generally do it quietly, but someone has to take the other side of the trade and with that volume, no one would suspect that the pros would be accumulating, they'd just expect that it was someone taking the other side of the trade and not really pay it any attention. The 1 min chart i in line (green box).


 Here's the 5 min chart which suggested AAPL was getting ready to break down with a relative negative divergence at the red arrow and a leading negative (more powerful) at the red box, it was the white small positive divergence that suggested accumulation for a head fake move. While this move today "could" be the head fake move I was looking for, I would suspect it would be bigger and on a closing basis. The Bollinger Band Squeeze and the action today now seems to fit the question that was bothering me last night.

 The AAPL 15 min chart shows confirmation in this time frame and then a sharp leading negative divergence as AAPL went lateral, lateral trade is quiet trade and this is where we most often see accumulation and distribution.

 The 30 min chart and the bigger picture in AAPL, the 15th I believe will be looked back upon as the day that AAPL's trend or its back was really broken, as I said last week, you can cut the head off a snake, but it can still appear alive and move around for quite some time, even though the event that ended its life had already occurred. Note how negative the 30 min chart has been since the 15th with a leading negative divergence. This negative stance does not rule out the snake still moving and short term divergences can still produce the head fake and you got a glimpse today of what even a small head fake move can do to a stock rather quickly in AAPL today.

DIA

 Intraday on the 1 min chart, the DIA is showing a relative positive divergence followed by a leading positive divergence as it trades slightly upward, but largely lateral compared to recent action.

 The  1 min chart has bled in to the 2 min chart which is also now showing a leading positive divergence (these charts are mainly intraday moves, but if they continue with strength they bleed in to longer charts that effect longer trends).

 Even the DIA 5 min is leading positive now.

 The big picture in the DIA on the 60 min chart which trumps all other intraday timeframes shows the DIA apparently under distribution as it moves higher, this is because Wall Street trades in huge size, they can't sell a position in a day, they have to let out a little at a time as to not drive prices against their moves. However recently the 60 min chart has shown strong 3C downside, leading negative momentum suggesting we are very close (this can be selling or more likely short selling)-remember in the size they trade, it takes time for them to build a position unlike the way or size we trade which doesn't effect the market. The leading negative divergence is also in a rather flat area of DIA price action compared to recent months, it is nearly lateral, the exact place we see smart money most active.

IWM

 The IWM is showing a positive relative divergence at the arrow and a leading positive at the square.

 The two minute chart shows the same, suggesting, like the DIA, there's short term accumulation in to price weakness. Wall Street needs sellers to fill their positions without moving the market against them. If they bought in to strength, they'd drive prices up, exactly what they don't want. This is all short term and in my opinion in preparation for a head fake move.

 The strength has bled to the 5 min chart today as well, again note the lateral trade.

 Longer term the 15 min chart has shown 3C negative momentum pick up as the IWM has been flat for over a month.

 The 30 min chart shows the momentum picking up as well recently and this entire move up as being under distribution, we identified the accumulation period which was August through October and a little after in November and December. Wall Street plans way in advance, I have charts of the home builders being accumulated in 2000 when no one was interested, then they made 5000% moves when the housing bubble started.

QQQ

 We are seeing the same confirmation in the QQQ intraday on the 2 min chart...

 And intense leading downside momentum in 3C recently.

 We also see that momentum bleeding in to the 30 min chart.

SPY

 Again, the SPY confirms the other charts with a leading positive divergence on the 1 min

 Also seen on the 2 min as strength migrates to longer charts.

 The 5 min is just showing hints of positive divergences now. These are not the kind of divergences that suggest the market is truly strengthening, just the kind we'd expect to see on a head fake move, the longer term charts, like the Risk Asse/ Credit charts show how bad the market truly looks.

 SPY 30 min has shown long term distribution, the momentum has picked up recently all pointing to a top / reversal and AAPL I think will be the trigger as APL is essentially the market.

Long biased trades on market averages or correlated assets could be taken, but they will remain risky as I expect the break this week, but it could really come at any moment. The real set up is waiting for a head fake move, that is where we really want to look at loading up on some trades with high probabilities and low risk. There are of course longs that will buck the trend, that is why I say market average longs or stocks that are closely correlated with the market.