AAPL earnings are still pretty interesting. Revenue came is slightly above consensus. They shipped 26.9 million Iphones, above estimates of 25-25 mn. I-pad sales were a big disappointment at 14 mn on consensus of 15.3mn.
The big deal is always guidance, AAPL guided at $52bn, below the consensus of $55bn.
Yet the stock didn't get annihilated, at least nor as of yet like it did last quarter with the next day down -4.32%, I believe that AH back then was much uglier than the next day's close. AAPL is only down -.09% as of last check .
AMZN was down as much as -12.8%, at last check -1.31%
Interesting that the market or at least these two stocks aren't getting hammered as they were earlier and as many expected, at least for AAPL once it resumed trading.
Earnings are always fascinating, but I have a feeling we may be seeing more here than just earnings anomalies.
Thursday, October 25, 2012
AAPL Doing the same
This is exactly why we don't use 3C to try to predict earnings, but rather behavior after earnings (not in extended hours either-regular hours).
Like AMZN, AAPL missed and missed pretty big especially with guidance.
The thought was AAPL was going to be smashed when they re-opened for trading, but like AMZN, all over the place, from -4% to a current 0% change in AH.
The NASDAQ futures
This is what NASDAQ futures looked like as AAPL was halted, AAPL began trading again at 16:50 right at that big green bar up!
Like AMZN, AAPL missed and missed pretty big especially with guidance.
The thought was AAPL was going to be smashed when they re-opened for trading, but like AMZN, all over the place, from -4% to a current 0% change in AH.
The NASDAQ futures
AMZN AH Earning All Over the Place
Earlier AMZN after reporting was down as much as -10%, now down only -1.65%.
That' a pretty big swing.
Lets see what happens when AAPL opens back up as it is halted.
That' a pretty big swing.
Lets see what happens when AAPL opens back up as it is halted.
Leading Indicators
As many of you who have been around at least for 2012 when the Risk Asset Layout (Now called Leading Indicators) was introduced, we have used it successfully to call a top in early 2012 that let us open core shorts with nearly every one of them returning double digits in months and EVERY single one in the green. It helped us call the June 4th bottom on a larger head fake move, the previous top was also on a head fake move. We have also used it for smaller swing and day to day as well as intraday moves and it has been very successful in calling these turns BEFORE they happened, giving us time to prepare.
The Leading Indicators are still positive for this entire week where we've expected a range to develop for one reason, a reversal is not a quick event, it is a process and a range is the best way for distribution to turn to accumulation.
So I'm just letting you know, the leading indicators for this week suggesting we see an upside move very soon are still in that positive divergence and still saying the probabilities are with an upside reversal.
The Leading Indicators are still positive for this entire week where we've expected a range to develop for one reason, a reversal is not a quick event, it is a process and a range is the best way for distribution to turn to accumulation.
So I'm just letting you know, the leading indicators for this week suggesting we see an upside move very soon are still in that positive divergence and still saying the probabilities are with an upside reversal.
On AAPL/AMZN Earnings
I probably would consider taking a speculative long in AMZN for a quick move up, I do have the AAPL calls still, I can't say whether this is earnings based, if there is a leak or not or what, I can only say we expected something to happen this week and this far it has happened, the last part of it is a move higher, whether AAPL beats or misses, I believe we will get that move higher. Tomorrow will tell for sure.
AAPL Update
OK, here's the full update so there's no confusion on where I stand on AAPL.
AAPL from healthy volume and price to the F_E_D sugar high. 2012 in particular is a parabolic move higher and these never end well, I was looking for a U shaped reversal from the move up on this chart and we just about have it.
If I had to pick a position in AAPL now and not touch it for a year, I would be full on short, no question about it. We try to work with the market a little more nimbly though.
AAPL's H&S was too obvious, this needs a good shakeout on the upside and it's one of the main reasons I think the market will see the same. Earnings seem like they should be the catalyst, but we've seen stranger things happen (remember RIMM?)
Here's the bearish descending triangle that shorts should be looking at now, they seem to be waiting for earnings as the break below support didn't raise much volume today.
The next break of support is this hammer at the white trendline.
AAPL 1 min today seems to be positive on these probes below support which would make sense from a head fake point of view, this is why I'm in short term speculative calls in AAPL for an upside move.
The 3 min chart is very unique in AAPL, in fact so much so, look at it again below with no annotations.
That's an odd change in character in 3C, the last time was a top.
The 5 min chart since last week's high is leading positive as we move closer to earnings.
While there aren't any long term positive divergences as I do not expect a long term move up, the 30 min chart has at least a relative positive divergence.
As far as my real longer term, highest probability feeling on AAPL, this 2 hour 3C chart shows a leading negative divergence hitting a new low, it also shows the accumulation around May when I said, "I think there will be 1 major accumulation period in AAPL and then they'll sell in to that and go short before AAPL fails". So far, that's been right on.
If I had to pick a position in AAPL now and not touch it for a year, I would be full on short, no question about it. We try to work with the market a little more nimbly though.
As far as my real longer term, highest probability feeling on AAPL, this 2 hour 3C chart shows a leading negative divergence hitting a new low, it also shows the accumulation around May when I said, "I think there will be 1 major accumulation period in AAPL and then they'll sell in to that and go short before AAPL fails". So far, that's been right on.
AMZN Analysis
I believe AMZN reports after the bell tonight along with AAPL, obviously we have two major fulcrum events fro the market tomorrow.
As far as AMZN goes and I will update AAPL before the close, here's what I see both long term, short term and earnings related.
Long term AMZN's trade was much healthier in the white area dates, since 2009 we have seen a large move, not as big as the move in white (on a log chart you'd see that), but still volume is way off and it looks like the sugar high, liquidity induced rally that it actually was. At some point the house of cards comes crashing down.
As for the 2009 trend, we have an upside channel buster, if you recall, while this looks bullish on momentum, it is actually bearish as volatility always is a sign of a top over a long chart like this. From the channel buster AMZN went straight to the bottom of the LNR Channel, the red move is something we see OFTEN before a channel buster like this just falls to pieces.
On a daily chart I'm thinking that AMZN will pull a similar volatility shakeout as it did in early October, there just weren't that many shorts on a small decline like that to see any real upside shakeout volatility, we have it now with a larger top that HAS broken.
The daily 3C chart interestingly goes leading negative (rare on daily charts to get such an extreme signal) exactly at the upside channel buster, in other words, that's where distribution started in earnest on demand at the move higher through the channel or what would have appeared very bullish at the time.
Closer, which is where we are looking at AMZN, the 15 min chart shows the break of the top and a recent positive divergence.
On a 10 min chart with better details, we also see a relative, then a stronger leading positive divergence, note the leading is in the same area as the rest of our market range, THIS WEEK!
On a 3 min chart we have a leading positive that is mostly from this week's range in the market, not as much in AMZN.
For this reason it is difficult to say this is earnings related when most of the market is acting this way.
2 min chart's trend also leading positive starting late Friday afternoon just as we saw in the market around 2 pm last Friday and through this week.
1 min chart the same, through late Friday and leading positive. I would guess that the response to earnings is positive, but I can't say for sure as these are the same signals seen throughout the market.
Even today's intraday 1 min chart is leading positive like much of the rest of the market. I'm thinking whether AMZN beats or not, they will see the volatility shakeout soon and that's where I want to short AMZN.
If anything interesting pops up before the close, I'll post it.
As far as AMZN goes and I will update AAPL before the close, here's what I see both long term, short term and earnings related.
For this reason it is difficult to say this is earnings related when most of the market is acting this way.
If anything interesting pops up before the close, I'll post it.
XIV / Volatility
XIV (Daily Inverse VIX short term futures) trades opposite the VIX and VXX/UVXY and trades with the market for the most part, this is why I favor XIV for a short term move, but love VXX/UVXY for the bigger picture.
Even though I think ETFs like XIV will do well in the near term and I have been positioning long in these, the probabilities on the charts and leading indicators as well as breadth and a number of other indications all point to a very bearish outcome for this market, so even though I want to be nimble and play the market and take what it offers, I keep these positions at speculative size, which for me means half of a normal size position. If my normal risk management allows for up to 2% risk per position, speculative trades should represent 1% of less of total portfolio before leverage. This does not mean a 1% stop on the individual trade, you can have a 20% stop and still keep the portfolio risk to 1 or 2 %, it's all in position sizing. For more on this there are links at the top right side of the member's site.
Here's the SPY (green) vs XIV (red), note the positive correlation between the two, so when playing near term volatility I want to be in the inverse XIV.
Longer term and where the highest probabilities are, VXX or UVXY which gain when the market drops are my longer term picks for playing volatility, note the 4 hour chart's massive positive divergence. It looks like someone has been accumulating volatility in preparation for an event to come.
Near term however the VXX 5 min is both relative and leading negative
The 3 min is leading negative today
XIV by contrast in the range for this week as I talked about Monday and I believe Sunday, shows a 10 min positive divergence which is the right size divergence for this size range.
Intraday the 3 min chart is also leading positive, the opposite of VXX's leading negative on the same timeframe.
Even though I think ETFs like XIV will do well in the near term and I have been positioning long in these, the probabilities on the charts and leading indicators as well as breadth and a number of other indications all point to a very bearish outcome for this market, so even though I want to be nimble and play the market and take what it offers, I keep these positions at speculative size, which for me means half of a normal size position. If my normal risk management allows for up to 2% risk per position, speculative trades should represent 1% of less of total portfolio before leverage. This does not mean a 1% stop on the individual trade, you can have a 20% stop and still keep the portfolio risk to 1 or 2 %, it's all in position sizing. For more on this there are links at the top right side of the member's site.
Financials/FAS
Market Update
I'll now be looking at leveraged longs as well as some other assets such as individual stocks, options perhaps and looking for the outstanding signals that can't be passed by if I am to add to the long position beyond what I had already planned for in a balanced portfolio. The point being, the head fake move and divergences to confirm the same, have come along nicely, I don't want to wait until it no longer makes sense to enter these positions on a risk basis.
Here's how the averages have been shaping up, many are even more positive than they look because I am not able to scale the chart correctly due to the size of the leading positive divergence.
DIA 1 min, with a leading positive divergence
2 min leading positive divergence so there's migration.
3 min divergence is leading positive so again more migration through the timeframes and AFTER the head fake move started.
DIA 5 min leading positive at the head fake lows of the day thus far.
10 min in line
ES remains leading positive
IWM 1 min leading positive at the exact right place
IWM 2 min so we have migration as well as a strong leading positive divergence.
IWM 3 min leading positive to a new local high.
NASDAQ mini futures (NQ) with a positive divergence then a leading positive at the right place.
This is an example of a chart I can't scale correctly as the 3C blue line should be higher and equal to opening price which would lift the entire divergence even higher, in any case, a new leading positive local high and again at the right place.
2 min has a large relative positive and a leading positive intraday today
3 min QQQ also at a new leading positive local high and at the right place.
QQQ 5 min leading positive at the right place.
SPY 1 min leading positive well above the open.
SPY 2 min leading positive is even stronger.
There's migration as the 3 min is leading positive as well and in the right place.
We'll see what other volatility the market has in store, but as I was trying to explain early in the week, we need to look at the big picture which is a range developing and not intraday or day to day volatility, the range formed and the same concept I was trying to prepare you for early in the week continues to be true.
Here's how the averages have been shaping up, many are even more positive than they look because I am not able to scale the chart correctly due to the size of the leading positive divergence.
We'll see what other volatility the market has in store, but as I was trying to explain early in the week, we need to look at the big picture which is a range developing and not intraday or day to day volatility, the range formed and the same concept I was trying to prepare you for early in the week continues to be true.
