AAPL Update

Yesterday I updated AAPL in this post, the gist of the post was AAPL was likely to see more downside and the only place I'd consider buying it is below a bearish triangle's support, under $500.

This post from December 31st identifies this move in AAPL (below) as a head fake move and as such several members shorted or have put positions in AAPL.

Yesterday in the post linked at the top and every post in the last week of December has the same conditions that need to be met to make AAPL a long.

 This breakout above the bearish descending triangle was identified on the first day as being a head fake move, that post is linked above so it makes for a decent short for those who have the risk tolerance. However the larger divergence has been a positive one and the place I said I'd consider AAPL as a long in below this triangle.

 This 5 min chart shows the AAPL breakout above the triangle and a negative divergence or distribution in to the breakout, identifying it as a head fake move that won't hold.

 Intraday there's a small "possible positive divergence", as of this capture it wasn't there yet, but even if it does make it there, I'd keep short and Put positions in place as I believe we are heading below the triangle and $500.

 One good question from a member who is using 3C is the deterioration in the 15 min chart's positive divergence, this is what buying AAPL under the triangle is based on. As I told him, we get "Jiggles" with moves down and up and when looking at a move down like this it looks bad, when you see it with a following move up, not so bad.

 I also said that yesterday's F_E_D minutes and the probability QE3 is cut short changes the whole dynamic of the market, I said the same yesterday. The market was counting on the F_E_D to be there, QE3 to be there and for the first time the F_R_D is hinting strongly that they may be ready to start pulling away, this could change the entire game as I noted yesterday, "We'll have to watch underlying trade over the next few weeks to month as these institutional positions are like large ships and take time to move".

For our purposes though, unless you are short AAPL, it doesn't matter if the 15 min.positive divergence falls apart because we have no long commitment in AAPL, we have an area and a set of conditions, but if AAPL makes it to that area and the 15 min positive has fallen apart, it's simply a "NO TRADE", there's no loss, it's just a failed set up and this is why we wait for confirmation in 3C.

As for this near term trade though, there could be a bit of a bounce, the volume surge first on the gap down and then on the break below resistance where stops were piled up gives smart money a lot of supply at relatively cheap prices and they can use that for a quick upside trade. If that trade can move high enough, then we may look at AAPL as a short or add to short position. I personally would not let go of any equity shorts on a bounce, as far as puts, probably not either, but that would depend on how strong the divergence is before the move.