QQQ and AAPL

First off, just like last week, the Q's are still the only average not to burst through the nearly 2.5 week old range (13 trading days).

In the second post of the day and the first during market hours today, I pointed out the seemingly no brainer trade of fading AAPL opening gaps as it was sold first thing on the gap, but also pointed out around 10:40 in the same post that AAPL,

" too looks as if it may have or is finding intraday support for a reversal."

Last week we saw a day in  which the QQQ had a much better looking 3C chart, it was also the furthest from the resistance zone that some averages (like the IWM) had already passed through and thus had the most work to do. While the Q's ultimately didn't make it, they did manage a +.41% gain while the SPX, Dow and Russell 2k all closed red for the day.

Today, while the Q's were hit harder from their open, around 12 pm (remember the last post and what was a recurring theme around 12:30-12:45) I posted that the averages,

" look like they are losing intraday momentum and seeing negative divergences of varying sizes and timeframes (but the theme is more negative) and looking very much like they may become range bound, the Q's is not among them. The Q's are looking like they are going to take off to the upside intraday shortly, they do have some catch up to do." 

So both the Q's and AAPL had a very different look, while the other averages looked to be losing something and later in the day their 3C charts also seemed to suggest the same, the Q's and AAPL were just the opposite. This would not be the first time this has happened recently, I believe it was last week that I said the IWM will be strong the next day and the IWM was by far the strongest and then that night I said the IWM will be weaker the following day, but the Q's would be stronger and that's the way it went down; those calls were based on charts just like today's, not on price action, the 3C charts were ahead of short term, 1-day price action by a day.

So without too much more chatter, other than to say the Feb AAPL $505's went green today, here's what was going on in the Q's and AAPL with the emphasis not only being on the open AAPL calls and earnings tomorrow, but the difference in character between the Q's and the rest of the market today.

 AAPL 3 min first sees a relative positive and then a leading positive as is most often the case.

 On the 5 min there are several relative positives, I'd guess they were purchases at support and then the relative negative on the gap opening today followed by a leading positive, by this time AAPL was already in th green for the day.

 Finally the 10 min chart to me looks like the cycle set up for AAPL, accumulation right at the 1/15 Crazy Ivan shakeout lows and a leading positive divergence late Friday and today.

Before this pattern even saw the first upside head fake move, it was so large that the probability of a Crazy Ivan shakeout was discussed. As you can see we saw the upside false breakout and then the downside false break down, that completes the Crazy Ivan, the baffles are clear.

I can go out further in AAPL analysis, but I don't think it's wise just yet without seeing how it performs and how it reacts to earnings (underlying trade). The calls can always be left in place for any continuing upside move and the trade can be switched over to an equity position at the first consolidation if need be so there's really nothing to lose by being patient with AAPL here.

As for the Q's

 The 3 min chart is calling moves that are about right, they are bigger than intraday, but not anything like a swing move. The positive and then leading positive divergence in the 3 min looks solid.

The 10 min chart shows the negative divergence and drop, which tells me that this was likely a pretty big dump of shares for the size move we are looking at in favor of picking up shares on the cheap as the cycle is set in advance, the 10 min positive is even stronger as nearly the entire divergence is leading.

I don't want to go beyond the 10 min here either, but for different reasons, while the 15 min has a slight leading positive posture in this zoom/timefame, it's in a large leading negative divergence in the trend. I don't think we need anything beyond what we have here for our analysis and as you see, the EOD was good to the Q's.

What is probably more important as far as today's action alone is the 1 min chart, in this case it's a bit unique...

While I could draw a number of intraday divergences on the chart, it would just make it hard to see another trend that was in play, the swings on the upside of 3C all led positive, there was a large leading positive at the arrow and it stayed leading positive all day right until it started moving at which point it was in line.

I don't know how this plays out moving forward, I'd expect the Q's rotate in at least on a relative strength basis for at least part of tomorrow, but the other thing that appears to have happened was accumulation right to the point of price starting to take off as smart money is almost never going to chase prices, they do their buying at the lows and that's what this chart seems to show, in any case it's a vastly different theme from the other market averages.

We'll be watching AAPL tomorrow closely as I have a high tolerance personally for risk, but a very low tolerance for sitting in options when there appears to be any reasonable signal that tells me price or volatility are going to slow down-with options you can actually have higher prices in the underlying asset, yet declining value of the option, thus I have little tolerance for consolidations, etc-thus a close eye on AAPL tomorrow.