AAPL Update

You may recall on Friday we took profits in some AAPL Puts for a 25% gain because of a short term bounce I expected that really has more to do with a market concept than a 3C signal, although both were there.

The concept and AAPL move I wanted to warn you of so you knew what it was if you saw it and knew how to take advantage of it if it materialized, as I suspected, it did.

From the post linked above...

"because the market is human emotion, the concepts are fractal as is the market, you'll see this happen on a 1 min chart, a 15 min chart, a daily or monthly chart-the concept doesn't change."

"AAPL has a small H&S pattern, you can see it above on the 10 min chart, you may recall there are 3 places I will play a H&S pattern and 1 I WILL NOT....The one place I will NOT enter a H&S is where Technical Analysis tells you to, on the break of the neck line (red trendline support). That's where most shorts enter on "Price Confirmation" and that's where most will be shaken out."

"I have no strong 3C proof of a shakeout here, but it is a common market behavior that takes advantage of the predictability of Technical Traders who have been doing the same thing in this case, for a century.

I mention this because first I want to prepare you in advance in case you see it, you know what it is and don't fall victim to the trap. Secondly and more importantly, for anyone wanting to enter AAPL short, that's the last low risk, high probability area to do so. You have to wait until price is above the neckline and you see signs of short covering like a rally with no pullbacks intraday, like a diagonal line."

As expected, more because this is just the nature of the market, as mentioned above (as I had no strong proof at the time), AAPL has done exactly what almost all H&S patterns do, this is why I won't short them where all Technical Analysis books tell you to, but I will use them to my advantage-like taking profits in puts before they disappear and when the time is right, entering at the Third place I will enter a H&S top-no matter the size-market fractal behavior.

AAPL Update...

 This is the H&S top, very small compared to a textbook H&S top, but the textbooks don't recognize the fractal nature of all price action, how else could I have properly predicted exactly what AAPL did this morning when I had no 3C signal at the time I wanred in this post FROM FRIDAY, "AAPL Possible Setup-MARKET CONCEPT" ?

There's the H&S small reversal top and the market concept of shaking out the shorts that enter on the break of the neckline as Technical Analysis teaches, "To short ONLY after confirmation", Wall St. knows Technical traders are so predictable that they always run a H&S through the neckline where the new shorts have their stops and that's why this is the 3rd and last place I will short a H&S pattern, after the shakeout. That means our AAPL Puts closed in ANTICIPATION of this move (which would be worthless today instead of a 25% gain on Friday) will be able to be re-entered soon for a bigger gain, we must still wait for the short squeeze to finish and the signals to line up.

 Here's the long term 30 min chart of AAPL hitting +$700 and losing 45% in 7 months, like the market now, AAPL was at VERY extreme 3C readings and few believed them as AAPL made a new high of 10 % over $700, but for those that trusted, a 45% (nearly half of AAPL's value) was taken in 7 months, the extreme 3C signals were correct.

You can see the positive divergence that was the recent AAPL run up, this is a bear market counter trend rally, as I say often, these are the strongest rallies you'll ever see, they have to be. So AAPL is already in a bear market and already pulling counter trend bounces, that tells us something about the overall market's position/situation, especially with the recent failures of late last week, remember when I said, "This doesn't look right" 2 times in 24 hours, booth times correct, that's the behavior seen in AAPL right before it broke, but few wanted to believe with AAPL at all-time new highs, I hope they held, it's the only way they'll learn the lesson.

We also see a negative divergence on this counter trend bounce, this is why I opened not only the puts (closed Friday), but an AAPL equity short (still open) for the longer haul.

 Here's the divergence for AAPL's counter trend bear market rally, it was strange of you recall, coming and going, I think that is because AAPL was already in a bear market with a counter trend bounce brewing while the rest of the market was behind AAPL so it was hard to reconcile, but the negative divergence here makes sense, things are easier to understand now.

 Here's a close up of the short squeeze predicted Friday BEFORE there were any 3C signals, I predicted this solely on the basis of market behavior, in fact more specifically, the predictability of retail technical traders and how Wall St. uses that predictability against them.

As the flat area continued (where we often see divergences), the divergence became much clearer. Look at the price action this morning, that is short squeeze covering.

The 10 min chart of the counter trend rally for context of the situation.

All we have to do now is look for the short term divergences to go negative, then AAPL becomes a short (equity or options or for me, both).

This is why I posted specifically, MARKET CONCEPT" because these are so predictable, even without evidence yet, we can expect them as they occur so often and all because technical traders are SOOO predictable.