AAPL Post

This s a hard one if you haven't been following the AAPL updates since about mid October, there are so many I wouldn't have time to find all of the links, but the bottom line was/is this: there are multiple trends developing at the same time, for instance I can have 3 trades open at once in the same stock, or lets use a market average for this example as it is easier. Maybe I have a short term call for some short term positive divergences in the market that I don't expect to be a huge move, but they are solid signals. If I simply bought say the SPY, the move might be worth 0.50%, but if I bought some calls instead with lots of leverage, I may be able to make 25% on that same move. However I have a longer term, say swing trade or maybe a bit longer, and I expect to see that average move down to a new low so in this case I might also have a long position in SPXU which is a 3x leveraged short ETF on the SPX, if I simply shorted the SPY for this anticipated move I might make 3%, but with SPXU I'll make more like 9 or 10% and then I have a longer term view, it might even be like August-October 2011 when the market was choppy and lateral and we were trading the swings, but longer term expected a new low to be made and that would kick off a long term trend to the upside. So my longer term view is after this swing low move is made, I expect the SPY to move up for 4-6 months and in this case I may just buy the SPY because counter trend moves in a leveraged product over the course of 6 months may create some significant draw down and emotionally make it hard for me to stay in the trade if I see SPXU down -18% on a counter-trend move.

That's just an example, but AAPL is similar in many ways.

Since mid to late October there's been a long term base or some support structure building in AAPL, here's what it looks like.

 This is the 30 min AAPL chart with distribution at the all time highs sending AAPL lower, but since late October there's been a long term underlying support trend, I imagine it's probably a pretty large position being put together and takes time. I don't think this changes AAPL's ultimate trend which is bearish, but this could be a several month long rally. Note how it has gone from relative positive divergences to leading positive divergences, that means the underlying trend seems to be picking up steam and this is how these typically develop.

 Looking at that same timeframe, but closer, (I'm not sure what the pattern is, but I can imagine a "W" like base), at "A" we have the left top of the "W", at "B" we have the first bottom of the "W", in between "B" and "C" we have the second top of the "W" or the middle, at "C" we have the second and final bottom of the "W" and as we talked about yesterday in the context of a double bottom and how they have changed since Technical Analysis grew in popularity, these bases often see the second test fail as a head fake move lower so my expectation for AAPL has been that it would make a move lower than "B" so this may have been a put trade , but once we get in to that area, that's where I want to watch how AAPL reacts and how 3C reacts because that low may be the very best entry with the lowest risk to take advantage of this longer trend this base seems to be built to support. The finally right top of the "W" would be "D" which isn't here yet, but the next rally up and before that I'd want to be already in place with my position, so AAPL may be making a significant trend transition right now.


 This negative divergence is in line with most of the market from the rally/bounce from 11/16, when accumulating they want to buy as cheap as possible, not after AAPL came down a positive divergence emerged on the 15 min chart.

Not to confuse things more with an even longer trend, but this is the longer or longest primary trend which is leading negative on a daily chart, AAPL went leading negative at the top, the literal top and has made a new leading negative low, but this 30 min trend I'm talking about above , could send AAPL higher as in the green arrow to the right of price and that is a trade that is worthwhile, but ultimately when that is done, I want to look for a long term primary short in AAPL and that is the large red arrow to the right of price scale.

This is trend analysis using different timeframes and helps paint the picture and know what moves to use as tactical entries for strategic goals.

As for yesterday's call position, this is one reason I don't like to have options with only a week or two left on them and why I prefer January even though it's more expensive and may yield less profit, I believe you pay for quality. I'll be leaving that position open for now, I see no reason on the short term charts to close it.

 2 min positive

 3 min remains leading positive

5 min remains leading positive and adds to the divergence.

This also has ramification for that 30 min trend that I expect to produce a longer/stronger move up in AAPL as lower prices appear to be under accumulation in a strong way.