AAPL was hit early today on soft demand for the IP5, which is no surprise at all, you may recall I watched the event when they unrolled the IP5 to the public and I can remember exactly what I said that day-well I can paraphrase it, "This is the first release from AAPL that I can recall that is evolutionary rather than revolutionary", in other words, instead of leading the pack, AAPL was playing catchup so rumors before the market opened that AAPL was scaling back orders for IP5 parts like the LCD screens, is really no surprise to me. I've had Iphones since the first and had an opportunity to pick one up for $150, but decided I'd much rather consider the Samsung line than commit to a 2 year contract and an IP5.
After hours Bernie gave a speech at the U of M and was answering questions about all of the bond buying programs and the possibility of rising inflation, Bernie said he didn't think that would happen, at least not "significant inflation" and went on to say, the worst thing the F_E_D could possibly do is raise interest rates prematurely. Hmmm.... After the F_E_D minutes the mere mention of raising rates is likely to be taken by many in the market as a hint to the markets and they aren't going to like it.
I'm not going to make any claims about Dell other than to say the daily chart showed there was something going on that was at least a base, whether it was today's news was known in advance or the cause of the base as these deals don't just pop up overnight, I have no idea.
As for AAPL, it hit stops and orders below the $500 level early this morning, but closed above, centennial marks like $500 are major price magnets as well as major psychological areas.
In addition to all of that, it's also at a very large descending triangle that we have talked about in the last week or so and before when there was an upside breakout from the bearish consolidation/continuation pattern.
On the day we have a doji and increasing volume, this makes this a high probability reversal candle (to the upside).
The 3C charts are still not inspiring much confidence from me except in the very short term, I suspect the hedge fund selling is still there and will be hard to shake for a while, but as far as the 5 min chart, it is still holding up, this is why I didn't like AAPL for anything more than a short trade, thus the calls.
I'd keep the call position open for now, but I probably would not be interested in a new trade until things clear up.
Leading Indicators are easier to describe than capture and save you some time. High Yield Corporate Credit and Junk Credit traded almost EXACTLY in line with the SPX which I have not seen to this degree before, they still haven't diverged negatively like I'd expect before the market makes a reversal move. High Yield Credit did see some selling in the afternoon, negatively diverging with the SPX and at the EOD it saw some of the heaviest volume of 2013.
The EUR/USD remains supportive of the market, but this is more about the Euro rising than the Dollar falling so ultimately it's the $USD that is more important as that's the true correlation risk assets have and it's been pretty close to flat the last two days on the close.
Commodities were catching a bit of a bid today and acting a little better than the recent past. Yields which the market tends to gravitate toward and are one of the L.I's we look for to go negative have been negative the last couple of days so they have a head start on everything else.
As I said in the "Nerve Racking" post, we have a lot of charts that are in bad shape and we've seen them fall apart with smaller divergences, still I really did and kind of still do expect Credit to really diverge with the SPX.
The negative charts I was looking for in the Equity Index futures have arrived as well along with what I showed you today so there's another check, but again, it's still credit I'd like to see go south.
There was no dominant Price/Volume relationship either today, like I said above, in many ways a very dull market, almost like Friday continued.
As for the 1-5 min charts of the averages, the IWM looks the best right now, I'd call the 5 min chart a positive divergence, the QQQ have a positive looking 1-2 min but negative 3-5 min, which would be interesting if that were market wide, considering my gut feel for a downside market reversal, a strong open and a very weak close, the QQQ's current 1-5 min charts would fit that description very well.
The DIA 1 min is close to inline with price intraday (but negative on the trend), but as we get in to the 2, 3 and 5 min charts, there's nearly a perfect picture of a negative divergence migrating through those charts. Remember it wasn't until the 10th last Thursday that we even entered the area where I suspected we'd see any significant and negative movement.
Finally the SPY, this looks the worst, leading negative on the 1, 2 and 3 min and the 5 min is started on a negative leading divergence as well, I suspect that's migration of the divergence.
The difference between the IWM 5 min and the rest of the market could also be taken as the same gut-feeling reversal, the IWM drags the averages up, they drag the IWM down. I'm just thinking out loud here, but however you slice it, since the 10th, things have been moving the right direction to the point today in which its actually nerve racking because there are some trades and positions I'd like to call out, but at the same time there are a few more things I'd like to see turn, credit being chief among them-perhaps High Yield's sell off in to the close is the start of something for the other 2.
As for the futures tonight, so far the 5 and 15 min charts I wanted to see go negative and did go negative are holding that divergence. In evening trade so far we have a leading negative divergence in both ES and NQ, it's not very big right now, but in my mind I can just imagine what it would look like if it did just keep heading south. Of course that's not objective analysis, but it's always a possibility and I'd love nothing more than to see futures up nice and high and a huge leading negative divergence, I'd have a lot of calls for you.
Here's an example of what ES looks like (NQ looks the same).
In any case, I feel good that we are on the right track, things always take twice as long as you expect. Remember when we were expecting trend #1 and expecting it to be stronger than we would think reasonable and the IWM made an all time new high... well that's your edge over Wall Street, patience, you don't have to be in the market all the time, you can pick and choose your battles and move quickly, don't underestimate that edge. PATIENCE
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