AAPL Update

The Jan 535 AAPL Puts were bought for $25.15 and closed at $27.80 for a +10.5% gain, but the gain wasn't the point, the probabilities of the trade were the point. I knew at some point AAPL was going to get complicated as the longer term charts started to clash with the shorter term charts (bullish/bearish respectively, but in different timeframes).

Lately we've been seeing some very complex timeframe trends developing, AAPL is one of them so for now I'm going to try to keep this as simple as possible, but many of you probably remember a longer term timeframe trend building on the positive side since late September for most of the market and October for AAPL specifically, I mentioned it was there many times, but it wasn't ready to act on and said, "We'll cross that bridge when we get to it".

Well we are getting closer to that bridge, but there are still some things I'd expect to happen in the market first, having year end trade to complicate things just makes the waters that much more muddy, but as I always say, when you are unsure, go to the longer term charts.

As for closing AAPL puts, first let me say I'm not ruling out additional downside, I'd like to see it, but technically AAPL did do what I expected even though it didn't do it in a way that I liked, it did do it. I expected AAPL to make a new low before any of this longer term trend business would come up and AAPL did that. I can't rule out another new low as the way I see it, the broad market still owes one.

The AAPL Put trade closed

 AAPL1 min intraday went leading negative last Thursday and Friday gapped down, you may recall I closed part of the AAPL position Friday.

 Looking at today's intraday trade, there was a leading negative divergence intraday in AAPL, it pulled price lower, but then the divergence lost its strength, it's this point in which I decided to close the rest of the AAPL Puts as I NEVER want to be in options trades 1 minute longer than I have to, any kind of suspicion with them and I'm out of there, it's too much leverage not to be SURE.

 Here's the 30 min (much more important and larger trend) 3C chart for AAPL, you see the leading negative divergence at the top to the left and what happened to AAPL since, but around October a relative positive divergence started forming, it gained more momentum in November and went to a leading position since-this is the short term and long term clashing and the long term should eventually win out, even though I must say the charts longer than 30 mins show the even bigger picture as very negative for AAPL, it all depends on the timeframe you are trading and when, but at some point AAPL should make good on this positive divergence.

I'll post a much more in depth analysis of AAPL, but right now the critical mid term 3-10 min charts where transition occurs are not giving great signals yet.

The 15 min chart went from our November 16th rally low to AAPL's high with a leading negative divergence sending AAPL back down, I expected AAPL to make a new low on this move, technically it did, right in to a positive divergence. The reason it's positive, the former support of November 16 is where all the stops and limit orders were so AAPL only had to trigger those orders and it provided enough supply to accumulate so I believe this is part of the tactical movement regarding the longer term 30 min strategic chart (see chart below).

The daily AAPL chart with volume shows the November 16th low as the rest of the market put in the same low, then remember the bear pennant that I said would likely be a head fake move-you can see it above and the break, it is there that AAPL broke support and triggered all of those orders, look at volume. This is how Technical traders are manipulated everyday because they are so predictable, they put stops and orders just below support as if it were some protective barrier and Wall St. knows this, why do you think the volume is higher the first day of the bread at the red arrow than the next day? Because all of the accumulated orders were wiped out. We're still in head fake territory on the break below the bear pennant as Technical traders expect that the break below the pennant should have led to the next leg down, instead we are still lateral.

This is an excellent lesson about stops and how Wall St. uses Technical Analysis against the crowd and how you can use their predictability to your advantage. Study the charts above, they're pretty simple.


Short term we probably will see more volatility, but it's time to be patient with AAPL and let the market tell us, when, where and how.