AAPL Still Has It...

You might find this post interesting, specially if you are not use to seeing how much the market is manipulated or you don't understand just how much AAPL effects the market.

Going back through posts from yesterday and today, first there was the AAPL Symmetry Post yesterday, although this could be a lot of things including a Broadening top (all H&S tops start as Broadening tops first). Whether AAPL really needs to finish out a symmetrical top or not I don't know, I can tell you that since the day after QE3 was announced the market has pretty much just trended down; if AAPL were allowed to fail today below the neckline its nearly 20% weighting on the NASDAQ 100 would have done some serious damage to the market.

Here's what the AAPL H&S top thus far has looked like using 3C.

This is a 5 min chart so it's a bit difficult to see the shoulder's and the head, but I labeled them above, you can see the accumulation for the second shoulder to the left of the head and then the stronger accumulation to form the larger move that is our head so far. You can also see quite heavy distribution coming out of the head and again reasonable size accumulation on the first shoulder after the head and what I suspect will be the second shoulder starting today, but we were also below the neckline, as I said, a failure in AAPL here would have consequences for the entire market.

Speaking of which, here's AAPL's longer term trend.

The leading negative divergence to the far right on this 4 hour chart is where the H&S top would be now.

Around 1:55 p.m. today I was having trouble finding clean/clear intraday divergences in the market averages. So I took a look at some other indications like Credit intraday, Yields and the Euro; while nothing was screaming, there was just enough of a neutral environment and slightly positive that I could envision a move higher. Thirteen minutes later at 2:35 I posted I was closing the AAPL short "for now, most of my reasons were based on market behavior and the manipulation of technical traders, but there was a positive divergence on intraday short term charts, I was about 25 minute off from the intraday bottom after AAPL had been moving lower all day.

I can tell you this...

 The $USD (green) and the SPX (red) have an inverse relationship as you can see above, a strong dollar generally means a weak market, but...

As you can see to the right in the orange box, the market lifted with the $USD, this isn't normal, the market falling on $USD strength like the white box to the left is normal. So there's a lack of clear signals, AAPL is in a dangerous area and despite a neautral environment at best, AAPL is lifted and the market with it.

CONTEXT didn't even support this move...

This is the ES (S&P E-mini futures) in red vs the CONTEXT model in green (basically whether other risk assets support the market moving higher or not), to the far right, the CONTEXT model DID NOT support ES moving higher which seems to be a direct result of the move up in AAPL.

Another take on today's AAPL action from ZH is this...

AAPL's Drop-and-Pop... as the stock fell, volume was sporadic with some big blocks going through (lower pane volume, middle pane - average trade size for that minute). Once we hit the 50DMA, average trade size suddenly dropped and became much more stable (i.e. small-lots used to auction the market up) and volume picked up - surging as we passed VWAP and those institutional orders could be filled at or above VWAP... fascinating day

I'm not sure I totally agree with the above, but more or less what they are saying is as AAPL was falling, average trade size was mixed, meaning some institutional sell orders or short orders were going through, at the 50-day m.a. where AAPL would naturally have found some support from technical traders any way (I do agree with that), smaller lot size was used (typically associated with a High Frequency Trading program trying to manipulate price up to a specific area) to get AAPL back up to its VWAP (Volume Weighted Average Price). VWAP is where market makers will try to fill orders for institutional clients, as their analysis goes, once VWAP was crossed, trade size picked up as Institutional orders were filled at VWAP, in this case they wouldn't be buying there, they'd be selling there.

In any case, I'm not quite sure I buy that explanation as it leaves VERY LITTLE room and time for Institutional orders to be filled (about 30 minutes).

Beyond that, our own 3C 5 min chart has done a great job with AAPL and it would indicate accumulation for a move higher started earlier.

 This is just a sampling of every significant turn AAPL has made on a 5 min 3C chart since coming off the top of the head on the 21st, 3C called every one in which AAPL reversed course.

This would be a closer look at the last couple of days and today's move.

Either way, you can see that AAPL still has a lot of influence over the market. I would also say that the outlook we currently have for AAPL seems to be the most logical based on the charts which should give us an opportunity to short or add to shorts in AAPL (as I closed the AAPL short, I'd be looking for a new position and probably at the top of the next shoulder that we seem to be starting now). I'd also say that based on the size of the divergence we have thus far and looking at the ones for the entire price pattern (H&S- first chart in this post), this isn't the kind of accumulation you'd expect to see if a big move to the upside was coming, this is about the same as what we have seen that formed the small rallies that formed the left shoulders.