Wrap- AAPL Was Leaked

Firstly, congratulations to NFLX shorts, although if you were leveraged I hope you considered taking some off the table (another great 3C call, a leak too?) and any who stayed with the MCP long although nothing has changed about my recent analysis this week.

All I can say is that no matter how many times I see it, no matter how much I tell you it's true, I'm still shocked when something as blatant as this happens and I'm talking about AAPL.

To just summarize, Sunday night (my normal post looking ahead for the new week) I said,

"Remember in Friday's post I talked about the Q's filling the gap? AAPL sure would be helpful in that task and a such, I've recently gone from "Holding the long term AAPL equity position to closing it and now even thinking about a short in AAPL".

Being opportunistic (I don't write the rules of the game, I just try to follow along as they change them in the middle of the game), Monday  I posted this at 2:09, "Opening Very Small AAPL Spec. Call".

I think everyone has at least a general idea of what I think about AAPL longer term, intermediate, short term and ULTRA short term. I didn't expect to be opening a leveraged long in AAPL yesterday, but I follow the opportunities and I often tell 3C users, "Don't just look for signals, look for signals that are jumping off the chart, that are screaming TRADE ME".

The call yesterday was speculative because it was only on 1 timeframe which would normally never cause me to enter a position, but this is what the chart looked like yesterday....

That's a REALLY fast accumulation area and very sudden and just a day before earnings.

I ended last night's analysis with this final sentence...

"Today's only interesting thing was AAPL's 1 min positive that just shot up out of nowhere ahead of earnings "

Just as a side note, I also added this last night...

"Out of the 4 possible combinations, today's Dominant P/V relationship was the most bearish of them all, Price up / Volume down.... the relationship would imply a sort of 1-day overbought condition and the next day would CLOSE down so we'll see."

Well 3 out of 4 isn't bad, so the lost art of volume analysis still has a lot to offer.

Then today in the "Market / AAPL Update" I started the first sentence of the update with...

"Why both, because I think near term (today), they are inseparable."

Then...

"Also popping up is an AAPL 5 min leading positive divergence, on this alone I think yesterday's position at speculative size (about half of even the smaller size option positions) is warranted and if there's a "W" with a continuing positive, I may add"

"AAPL may very well be the market's pivot point today or asset that all the action is based on."

Then right after the post above, I said that if I did add because or based on AAPL, it would be to the Q's because of the beating I've taken in options before earnings on implied volatility.

Then I posted, "Going with the QQQ Aug. $74 Calls"

Then things started to get real strange...

Near the close at 3:40, "AAPL Update"  was posted with the following...

"If there ever was a time for a head fake move in AAPL, this would be the one, but I have no idea what to make of it unless A) there's some leak in AAPL earnings or B) they don't care, they'll just spin sentiment the way they want and retail doesn't care what the earnings are if AAPL moves up AH."

Continuing with these charts and comments...

" You see that volume under intraday support where all of the stops or limit orders were congregated? That is the reason for a head fake move."

"AAPL 1 min seems to have almost no damage at all, it doesn't really fit except with a true head fake move, but there's so little time left in the day, Does Wall St. know AAPL will have a good reaction to earnings or will they create one?"

Then finally, JUST BEFORE THE CLOSE, "QQQ Update"

"I'm getting the feeling 1 of 2 things is happening, based on how fast the AAPL 1 min went positive yesterday (extremely fast and deep), there's some sort of AAPl earnings leak that is bullish for AAPL and thus the Q's "

"The NYSE TICK chart is BARELY NEGATIVE at -500?!?!? What the Heck? You'd think with price action like that it would be -1500."

"The QQQ has an interesting range doesn't it, it's somewhat disguised as a H&S top, although it is no where near that formation, many traders would interpret it as that because they have no idea what one is. However the range is what is really interesting, is it camouflaged?"

" QQQ 2 min just went positive today, hasn't seen much damage, a short term chart like this goes positive right before a reversal move."

We all know what happened next, AAPL ended the after hours session up over 16 points or nearly +4%.

How in the world did we know to buy calls Monday, to add to the AAPL long position using the Q's to avoid pre-earnings implied volatility? 

How many times have you EVER seen me take a position based on a single 1 min intraday chart? 

The fact is, there's NO DOUBT IN MY MIND THAT YESTERDAY'S SUDDEN AND VERY SHARP ACCUMULATION WAS AN EARNINGS LEAK, you'd never see this in price alone, but with 3C we could see it in underlying institutional trade. AAPL WAS LEAKED!

Now we will see what we can make of those positions and see where that takes us moving forward, but I can't stress enough, you know what the 15 min QQQ or SQQQ charts posted today look like, you know where the longer term or big picture because "Long" probably isn't accurate now, look like. You also know that this was something FIRST MENTIONED SUNDAY NIGHT, IS WALL STREET GETTING THAT PREDICTABLE FOR US?

30-year Treasury futures and TLT acted just like I hoped they would today so I think that speaks to the 15 min or even 5 min negatives posted  as far as bigger picture goes.

High Yield Credit and Junk credit acted just like you might imagine for a QQQ gap fill, but interestingly at the same time, the bigger picture charts acted just like you'd expect them to act, for instance...

This is just the underlying trade added today, if a 1 min positive AAPL chart can do what it did, then imagine this 15 min HYG that stretches past the 30-60 min charts as well, just to put things in perspective. Beyond underlying trade, HYG is also dislocating on our Leading Indicators layout as is it's twin, Junk credit.

Ironically at the same time, this divergence captured today in both VXX and UVXY and confirmed in XIV, this is nearly every bit as sharp as the AAPL positive from Monday and these are intraday/near term...

VXX 2 min, in line all dat until it dipped, then major accumulation.

As for the averages, the SPY 1, 2 and 3 min charts kept moving negative as they were earlier, but the SPY 3 min landed in a position in which it would be in the middle of going negative, but making a pit stop to a short term positive.

The earlier positives from Monday or actually Friday have decayed and peeled apart from price, the overall trend is worse, but the intraday is in positive position, almost like a brief layover. The 5 min after that leaves no doubt as to which way it's heading since Friday/Monday, deterioration.

The Q's are in a similar situation, but more positive on the 2 min, the 3 min is negative, 5 min as seen earlier is nasty, but paused. Essentially the Q's could fill the gap as envisioned Sunday. The IWM and DIA are in the same overall vein, just slight differences that mean nothing. In my view, a QQQ call would be the right play as far as the average and as far as the amount of time/profit potential (in other words, transitory).

Just about everything else is in line with the updates including Crude oil, I think if you were to go back to Sunday night's post and then the interlude caused by AAPL yesterday, NOTHING has changed, the Oil Tanker is on the same heading, AAPL is like the jet-ski that may just make the move in the Q's mentioned Sunday night, but it doesn't displace the kind of market force that the oil tanker continues to and on the timing front, AAPL may have been the last hurrah as the new concept of the past few years plays out, "No gaps are left unfilled".

To me, this means we stay on course too, if we can take advantage of little bumps here and there like AAPL, so be it, but the dilemma I posed the last several days, "Do you wait for the kind of signals we usually wait for or do you focus less on the details and more on the large brush strokes?" I think there's a happy median that we have often used called phasing in, but risk management has to be sharp, it can't be "Open a full position and then add a little at a better level". ALL RISK MANAGEMENT AND PHASING IN PLANS HAVE TO BE ,MADE BEFORE A SINGLE SHARE IS PUT IN TO THE PORTFOLIO.

Otherwise, I think we stay the course set out and China's PMI tonight is just more evidence that has been leading us here...