AAPL Update

It's kind of weird seeing some of the "old ways" of the market , pre-F_E_D "Accommodative Policy" start to come back, I obviously assume it's because of the Taper and I'm going to say there's a 70/30 chance that the taper is seen not as a process, but a tightening mechanism and if that's the case, it's not good, especially when we are in the "Seasonal Adjustment " period for economic data, it runs from now until March/April, if you can still find the CITI Economic Surprise Index, you can see the period clearly, economic data looks beautiful during the period and then just dumps as the S.A. period ends. The actual Seasonal Adjustments applied to each economic data series are different, but totally arbitrary, talk about a "Goal seeked" print, this is the meaning of it, put in the number you want and the computer figures out how to adjust the data to give you that number because no one can find a consistent, objective system os adjustments, they are arbitrary, but the point is, they allow the F_E_D to say, "The economy is better, we can taper/tighten more" so I suspect the new year will bring the Good news is bad news to a level we haven't seen before.

The point was though, the old days when each day had a stock that was the fulcrum of the market, this is what Cramer was talking about in his one truly brilliant interview, (paraphrased)

"If your fund is down for the year (and RIMM is the fulcrum stock that day) it's exceptionally important to knock a RIMM or an AAPL down by using options, you can move the market for about $8 million which is not much and then spread disinformation to the Pissanni's of the world because they want the story, it's really important when your fund is in survival mode to do whatever it takes to knock an AAPL down it's a fun game and it's a lucrative game and if you aren't willing to do it, maybe you shouldn't be in the business".

We haven't seen that kind of fulcrum behavior for a long time, the market has been risk on or risk off and it didn't matter what you bought or shorted because everything moved together, that is ending as we have commented recently as the averages see massive dispersion, look at the IWM vs the Dow last Friday, huge dispersion, And yesterday, AAPL is the fulcrum on VERY old news, but it's buy the rumor, sell the news, however when you sell, you don't sell in to losses, you sell in to gains (smart money).

So lets take a look at the darling which I have stayed away from. You may recall as early as April this year I was saying, "There's something up with AAPL", maybe a counter trend rally, then maybe the Icahn stuff, but something was developing and we had a few trades in that period.

The reason I have maintained interest in AAPL, but no positions is a 15 min leading negative, but everything else was in line or better, it's a matter of patience to let the timeframes align, well if it was "sell the news" yesterday, take a look at AAPL now.

 From AAPL's top, which we gave plenty of warning that there was huge distribution as AAPL hit all time new highs and I made the mistake of having a beautifully positioned core short position that I closed to try to trade what looked like a little bounce figuring I'd short AAPL again after having taken profits on the last position, at higher prices, then Loeb's (Third Point) 10-k filing came out and AAPL was missing from the top 5 holdings. Since hedge funds herd just like retail around a leader (LOEB is one of the few that is willing to try to outperform the pack), they all sold en masse at once and I missed a -45% gain which I would have pyramided up all the way down using the "Making more than 100% on a short" technique described in this article I wrote, one of the benefits of being short vs. long.

Right now, AAPL has just about retraced a typical counter trend rally and is entering an area with massive overhead resistance, the people who held the bag and are more than willing to sell if price gets near there entry which they assume it will.

The long term Trend Channel, where AAPL was stopped out and below a 10-day ATR which is falling as AAPL makes the move higher, not what you want to see as a long.

 This is that 15 min chart I mentioned, the lonely chart, but interesting. It seems there's a VERY clear zone of distribution, likely a large fund has a sell order in the area.

The 30/60 min charts were perfectly in line with the trend so I didn't want to touch AAPL either way until something changed, now the 30 min chart has gone negative initially, the 60 is still in line so I'd prefer to give AAPL a bit more time or at least wait for normal volume.

If indeed yesterday was sell the news, this 2 min that had been in line sure went negative on the gap up.

As did the 3 min

And incredibly, and this is an example of the "Gut felling" I had yesterday that things are going to get much more ugly than I've even seen, the 5 min chart where intraday institutinal underlying trade can be seen, went straight down.

Here's a closer look.

That's not a mistake, that's intense selling, but again, I think patience and letting the market get through Window Dressing (Thursday at the close) and letting some volume return to the market would be wise before entering AAPL, I may change my mind if charts like the 5 min keep popping up.

This is what I meant yesterday and both the "Sell the news" and Fulcrum of the market effect are very old concepts that have been missing for years that are just returning.