Wednesday, September 12, 2012

Well if that isn't interesting

I mentioned something I had hypothesized might be a trigger in moving AAPL and thus the market, a change in character in the worst looking of the averages. This isn't something I've used much in the past, but market makers and specialists know the order flow, they know when something is about to happen as they fill the orders for the people who make it happen. AAPL (and other assets) all had multiple fishing expeditions for stops, but they were tiny moves, just enough to take advantage of traders' habit of placing stops EXACTLY at support and resistance levels, you saw the first on in AAPL, nearly a million shares in 5 minutes on a $.12 cent break of support. Still AAPL wouldn't break down, the 5 min positive divergence wouldn't deteriorate.

Early today I thought 1 of 2 things would happen, either AAPL would just take off as the IP-5 was introduced or there would be a signal from market makers/specialists as they stock up just before the move. The reason I thought "just before the move" is because this wasn't a huge divergence in AAPL, it was only out to 5 minutes, market makers/specialists wouldn't need days of stocking up like they normally would on a bigger 15 or 30 min positive divergence. The other side of the coin was the very negative charts in AAPL beyond 5 mins (as you know, I expect AAPL to be sold in to), so as a market maker, you also don't want to have so much inventory that you are stuck with it when the worm turns. This was just a passing thought, but something I thought I'd watch for and within minutes of those signals showing up, AAPL surges over 2% to the highs of the day on volume with indications it will move to tomorrow.

Go back and look at the signals I posted, they were right at the same time AAPL began its move.

Now we look for the other side of this move.

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