AAPL Charts -Earnings

The charts below are the reason I consider the Feb. $505 and even $520 Calls to still be an open position as well as why I don't want to go out any further than a short term trade at this point with AAPL. Earnings are Wednesday after market and while AAPL has not been a big leaker in the past, I would thin we'd see some strong movement in to earnings showing us how hedge funds intend on being positioned going in to earnings.

I personally would not open a new AAPL options trade right before earnings as implied volatility in options before earnings vs after earnings makes it very difficult in many situations to make money even if you are 100% right on.

That being said, the older trades that were opened a week plus ago should be ok.

I can't imagine guidance can be great considering the recent news, I can't imagine margins can be great either so it will be interesting to see how AAPL is played in to earnings. I can't imagine there will be many hedge funds that won't be looking for an opportunity to get out, it's the tactics that will be interesting as they typically will have to make things look the exact opposite of what they want to achieve. I'm not even going to get in to the longer term until I see how this goes, but I'm definitely leaning toward a long term bearish bias, but a lot of things can happen on the way to "Long term".

I personally think AAPL has hit it's MSFT apex, that by the way happened in MSFT not too long after they declared a dividend like AAPL.

In any case, here are the charts as of now...

 If you are familiar with technical analysis price patterns (follow the red arrows) you'll see a downtrend in AAPL followed by a large bearish descending triangle; even though this triangle is really borderline too large to be a consolidation/continuation pattern, this is where traders allow subjectivity in to their analysis to fit their biases (I'll remind you that the market will give you as many ways as you need to justify any position you want to take if you have a bias rather than an objective outlook).

AAPL did what technical traders would not expect based on the trend and price pattern and made a head fake breakout in yellow instead of breaking below support (at the white arrows), that hit stops and orders as you can se by volume, then as we suspected, we saw a "Crazy Ivan" shakeout with a move below support (again note the volume spike). Right now we are almost exactly at longer term resistance as well as Friday's close (or first resistance).

The 3 min chart shows what has been a reliable trade/trend in AAPL, fading an opening gap up, the bigger the gap, the better the trade (fading the gap), however we have a longer term positive divergence already in place before this a.m. and as we near resistance from Friday's close, a leading positive move.

 The 5 min chart shows a bigger gap to the left of the chart being faded with a leading negative divergence and then a positive divergence at the recent lows and a leading positive position now.

 A closer look of the last several days shows this a.m's opening gap was faded as usual and that leading positive 3 min divergence bleeding in to the 5 min chart.

 At 10 mins. we have a bit of a stronger signal (positive) at the recent lows, the red is another gap being faded on the open and an overall current leading positive divergence, but not a huge one.


 Here's the 15 min trend, from the left, a gap up being faded immediately the next red arrow is another gap up faded an then a leading negative divergence before a gap down the next day, then another gap up faded and a smaller 15 min positive divergence, remember the 10 min looks stronger, but it hasn't migrated all the way over to the 15 min chart so it's not as strong as you might think for a long term trade right now, at least not the timeframes we are looking at.

At 30 mins, this is why I'm hesitant to consider anything other than a short term trade, a larger gap up (seen above on several charts) faded, at the next smaller red arrow another gap faded and a leading negative divergence before a gap down and two more gaps up both faded, but nothing positive here.

So I'll hang on for the short term, see if anything develops for the longer term, but as of now I don't see good probabilities or a strong edge to take a longer term position, I have suspicions, but I'll keep those to myself as they aren't backed by solid evidence.