Wednesday, August 22, 2012

AAPL, an Exodus coming?

Two simple charts, a 1 min and a 5 min, the 1 min is more immediate, the 5 min is more powerful as to the underlying theme of trade. It appears to me a narrow doorway is being opened as it seems a large group of hedge funds may be looking to lower their risk profile and AAPL is where much of it is congregated. Then how they open the door...

 The AAPL 1min chart, door being opened...

 Severe damage on the AAPL 5 min chart, number of institutional traders looking to exit said door.

Now the mechanics of opening a door like this... Volatility.

 VXX 1 min volatility with a negative divergence, not huge, but it should bring volatility down in the near term intraday.


 2 min chart confirming after a bog move in strength.

Ultimately the problem with trying to fix too many at the same time through 1 door, the 5 min strength in volatility. Things could get really ugly in AAPL quickly once the door starts to shut and everyone tries to get out at the same time, a kind of stampede.

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