AAPL Update

Here it is and I LOVE the looks of everything.

Friday I opened some September OTM (Out of The Money) AAPL Puts at $650, that was the first half of the position as can be seen in this post from Friday.

In this post from a bit earlier on Friday I was concentrated on the AAPL triangle, check out the post if you don't understand the significance of AAPL forming a triangle right here. 

I also said in this same post, 

"I mentioned AAPL and its triangle and the possibility of a Crazy Ivan shakeout, it looks like that's what we have."

I ended the post with this,

"A move to the upside above the triangle and we'll likely have a Crazy Ivan shakeout, but again, consider the bigger picture theory I laid out this morning, don't rush it."

This is EXACTLY why the new position on Friday was a 1/2 position as mentioned above, "The First Half". I'll be looking to add the second half and probably will do so today.

Here are the charts...

Here's the Triangle mentioned Friday, Technical Traders are so predictable that it makes Wall Street's response to them more predictable. The significance of this pattern is simple, it is a symmetrical triangle that carries no bullish/bearish bias by itself, it all depends on the preceding trend which was up, that makes this a bullish consolidation/continuation pattern in any Technical Analysis book you read, that means every retail technical trader is expecting AAPL to do exactly what the green arrows are showing, consolidate and breakout to the upside. We did see a head fake shake out move first to the downside, many AAPL longs will buy the price pattern alone, but there is a tendency in TA to wait for price confirmation, I call it chasing, but they have few worthy tools to work with, this breakout to the upside this morning opens up volume, buyers step in and create demand which is exactly what hedge funds and big traders like banks, Wall Street need to sell their AAPL or short in to it. For hedge funds right now it has very little to do with what AAPL is worth, if the ship sinks (the market) all the stuff in the ship sinks with it (most stocks will follow the market). At this point in the year, only 11% of hedge funds are doing better than the SPX, this means hedge funds are about to be or are already being walloped with client redemptions as they can buy an S7P vanguard fund to get better performance than 89% of hedge funds and without th 1.5-3% management fee and the 20-50% (of profits) incentive fee. So hedge funds are better off selling at higher prices while they can in order to raise cash for the redemptions that are coming from clients rather than take a chance they have to sell at much lower levels, this is why this triangle, right here, right now is so important, VOLUME and DEMAND, exactly what hedge funds that are holding positions that can be hundreds of millions of dollars in AAPL alone and AAPL is the #1 hedge fund holding. If they need to raise cash, AAPL is the place to do it and this triangle and the breakout help them do it. This is why I entered half the new position Friday (just in case it went the other way and left half for a break out or Crazy Ivan move).

Here's the first head fake move and the pop above the triangle with volume rising, it may not look like much, but in AAPL it is significant and every bit counts.

 The 1 min chart DID NOT even try to confirm the pop this morning, didn't even attempt confirmation.

 The 2 min chart is also leading negative, but much more than just this.

 Here's the trend, you'll note that the divergences get stronger at resistance points that price breaks through for the very same reason I just outlined about a move above a triangle which is the most basic chart pattern any technician out there knows.

 The 3 min leading negative, but this doesn't begin to tell the story... I suspect the next hedge fund holdings update will look very different than the last.

 The 3 min chart's trend, UGLY!

 The 5 min is deeply leading negative, look were it got worse, right at the open on the 21st-gap up, the yellow is the triangle from above.

 The 5 min chart and exactly what happened on a close up at today's break above the triangle, this is important because that's a big move on the first timeframe that really shows big flows of money beyond intraday moves.

 The very important 15 min chart (the longer the timeframe, the bigger the signal and more flow of money), this is hitting a new LEADING LOW!

 Look at the sharp decline in the 30 min chart to nearly new lows! There's a price formation here that few may see.

Remember last week I talked about double bottoms and how according to Technical Analysis and historically the second bottom is a little higher than the first bottom? Well that has all changed, at least for the last 10 years, but traders ignore that, now what happens is the second bottom is lower than the first, it's a head fake move on a large scale, it shakes out longs as they don't expect the first bottom to be broken and they put their stops there, then the double bottom usually takes off to the upside from there. Well it's the EXACT same thing with double tops like what we have here, it use to be the second top was slightly lower than the first, but for the last 10 years and against everything Technical Analysis has taught for nearly 100 years, the second top has been making a slightly higher high (a head fake move kicking shorts out, bringing longs in and you know what happens with failed moves, they become fast moves-just look at the breakout above resistance in BIDU that led to that big/fast move down). So not only do we have the price pattern the way it has been playing out for the last 10 years, we have technical traders still not adjusting to the new realities and we have 3C confirming everything above with a leading negative divergence and on a 30 min chart to boot with confirmation throughout! These are the emotionally difficult trades to make, against price and what you see with your own eyes, but if it were easy, then everyone would be making money except Wall Street.

 Intraday this is what I'm watching for an entry signal, a small triangle that should produce a directional move, I'm hoping up (but not for too long), that's where I want to add the second half of the OTM put position from Friday.

The 10 min. Bollinger Bands are tightening, that should lead to a highly directional move, I'll let you know when I take action.