AAPL Update

I'm still hanging in there with the AAPL Calls...

 AAPL daily chart, this isn't the first time AAPL has broken support, the last time we identified a slew of positive divergences in AAPL/Tech stocks and Tech itself was on the 23rd/24th, AAPL went on to report earnings after hours on the 24th and jumped about 9%. The recent break under support on Friday didn't see the same kind of volume as the previous break. We know that reversals are almost always preceded by a head fake move and with volatility higher (the stakes are higher as well) it would seem natural that the head fake moves would be bigger. The difficulty remains as we move toward more and more market uncertainty (and I'm talking about the uncertainty that was expected before yesterday added to it) one of these moves to the downside is not going to be a head fake move. We should be able to identify whether a move is a likely head fake or not using 3C, but again, when the market truly breaks, divergences (if there are positive ones there, which is an "IF?") will be run over.

I liked the idea of a speculative AAPL long position for a quick move based on some strong positive divergences, that's why I'm sticking with it thus far, additionally as I have already mentioned, since any long trade runs counter to my larger market expectations, I view most long trades as speculative and therefore they are smaller position sizes, basically money you can afford to lose, they are not the kinds of trades to bet the house on.

 AAPL this morning shows a positive divergence on the 1 min chart carried over from Friday, the move higher off the open saw a negative divergence and the pullback toward today's lows saw a positive and then leading positive divergence.

 The 3 min chart shows the distribution on the AAPL earning pop on the 25th, this chart has several positive divergences, both relative and leading and all in all still looks pretty good.

 The 5 min chart has an earlier leading positive divergence, AAPL lost ground since then (which is not wildly out of the ordinary, accumulation seeks lower prices, just the same as I want to short in to higher prices-Wall Street is no different in that common sense approach).

The 15 min chart remains the backbone of my reason for the trade, absent this chart I would not have considered AAPL. The 24th showed a strong leading positive divergence in to lower prices and a lower low, AAPL popped the next day. The overall trend on the 15 min chart is still very much leading positive, it hasn't broken down on moves lower and it is certainly capable of doing so; many members I'm sure recall 15 min charts going deeply leading negative in 1 day, so AAPL still holding relatively well here is what keeps me in the trade.

Some of you may remember RIMM with a positive divergence just before earnings, many of us went long thinking the accumulation was due to earnings. RIMM did not react well to earnings and fell 9%, the positive divergences remained though. A week or so later RIMM had a major management shakeup and dropped their twin CEO's that had been with the company more than a decade, RIMM shot up from there and the trade was profitable. The point being, even though RIMM didn't do what we originally suspected it to do, the positive divergences remained, I believe all of us remained in the trade and were finally rewarded for it. While we can often see what smart money is doing, we have no idea of why. We thought it was earnings, it was really about something larger, a major management shakeup.

So for now, I'm sticking out the AAPL Calls.