AAPL Update

As mentioned late on Friday, I decided not to enter AAPL after it saw an 11 point drop and was showing signs of a positive short term divergence in this AAPL Update.


AAPL closed the week with its biggest 2 day drop since November, a shakeout to the upside certainly seemed logical, whereas the dogma of technical analysis would tell you to be all over a short position on a move like that, as I mentioned in the update above, I'd prefer to wait for a better set up and we are seeing that unfolding today.

This was the AAPL 5 min positive divergence posted on Friday, still intraday timeframes and a rather short divergence which would fit with a shakeout move.

To the left is the action from earlier in the week.

As for AAPL today and the longer term....

 There have been warning signals before this leading negative divergence in AAPL on a 60 min chart, I have been warning that something appears to be changing for AAPL, I'll address that on another chart. At last week's Monday/Tuesday highs, AAPL was already in a leading negative position, I don't think it is coincidence that it put in the largest 2 day drop in 4 months this week.

 The 30 min chart shows the same leading negative divergence and perhaps more importantly as far as timing goes, it is in a flat area, almost a H&S type formation. Negative divergences are often seen in flat-ish areas of trade, again I suspect it has something to do with institutional orders being filled near the VWAP.

 Again, the 5 min chart from last week's highs to the lows and the divergence that made me decide to be patient and wait for a better set up in AAPL (short strength, not oversold weakness-although looking at a longer term chart of AAPL, oversold only applies to intraday trends, certainly not to the daily/weekly). At this point, I view AAPL as a short, it's just a matter of the tactical entry, being able to get the best position with the least risk and highest probabilities. If I were a long term investor, a few points here or there probably wouldn't bother me and I'd likely just short AAPL right here and put it away for a while.

 This a.m.'s action on the 2 min chart is showing non-confirmation.

 The 1 min chart is worse, it went negative right at the highs. If it were later in the day and the Q's had moved up decently, I'd probably be looking to short AAPL here, but as it is early and there's still that European closing trend of recent, I will be patient with AAPL.

 Look at the weekly chart, I think I may have posted this (I send a lot of charts via email so sometimes it's hard to remember where I posted what), but the VERY parabolic move that actually started since 2009 has become EXTREME since the start of 2012, everyone knows how I feel about parabolic moves either up or down, they tend to end badly and we have seen the evidence of this on numerous occasions, but this being a weekly chart, it carries special importance toward the longer term trend in AAPL. I want to show you MSFT when it was behaving in similar fashion...

 MSFT weekly chart back in 2000, it also went parabolic and got very volatile toward the end. MSFT declared a dividend after the Tech Bubble popped and MSFT has never seen this kind of growth again, this is what I was talking about earlier, perhaps the trouble seen in AAPL starting several months back might have been dividend related, certainly I think there's a Steve Jobs influence there too, but the point being, these two tech giants look very similar between MSFT in the 90's and AAPL now.

 Since 2012, this 10 day moving average has moved up, it is now moving laterally, something few AAPL longs probably notice as they are more focussed on AAPL new high headlines.

And on a 15 min chart, you can see what does look a lot like a H&S top forming. There are very few "V" shaped reversals, this is a huge market cap stock and they don't usually turn on a dime as institutions have to move positions and huge amounts of shares around. However, the danger as pointed out in the breadth post is the day when it unambiguously cracks. If we saw the biggest 2 day drop in 4 months off some lateral action, when the ice breaks it could be a whole lot worse in a single day and thus we have a term for that, "Bull trap". I can't think of a better stock to set one up in.

Again, for now, I'll be patient with AAPL and se if I can't find a better entry.