"The last update things were blah for afternoon signals, they are starting to reveal more character now...The IWM has revealed what the earlier non-descript signal was going to turn in to as it was transitory. The Q's haven't had the same reveal"
With APPL's diminished, yet still heaviest weighted stock in the NASDAQ 100 by a mile, it's not surprising given trade in AAPL today.
We've had a couple of AAPL updates, it's on the radar, although not an open trade, yet... However it is one that I think we should keep on the radar and look for the entry opportunity to line up.
Some recent posts about AAPL...
AAPL Interesting Friday April 11th...
"There are several charts for AAPL (long) that look interesting, I would not enter more than a partial equity position at the moment as there's a bearish triangle that could be used for a stop-run/head fake move and that's where I'd really want to enter or enter options/calls."
Here are some charts and their commentary from the post linked above...
"Here's that triangle I mentioned, a perfect head fake set up with a downside break, creating a bear trap."
"I think I'll enter a 1/2 size trading position (equity LONG) and wait on the other half or possible option/calls."
So we had a bearish triangle in the right place (proceeding a move down) with a positive divergence (several actually) which told us a few things, 1) Technical Traders would see the triangle as a bearish triangle and short a break of price below the triangle 2) We have a positive divergence at the site of the triangle meaning someone was accumulating it which finally leads to 3) The expected move below the triangle (according to Technical Analysis principles) would likely set up a head fake/false move which would create a bear trap and this is where I'd want to enter in size, although there was enough at that point already to enter a partial position, "I think I'll enter a 1/2 size trading position (equity LONG) and wait on the other half or possible option/calls."
Here's what happened next...
White=The bearish consolidation/continuation symmetrical triangle which had a positive divergence, telling us the probabilities were for a false move or "head fake".
Yellow=A move below the triangle begins, this is exactly what technical traders expect to happen as this is a common price pattern that most Technical traders notice immediately and believe that it will break down and start the next leg lower, continuing the preceding trend which was a move lower, thus the reason they are called "Consolidation/Continuation" price patterns; they are expected to consolidate (the triangle) and then continue the preceding trend. However we know that technical analysis is used against traders every day because they have not adapted and still follow nearly 100 year old principles of technical trading, Wall St. knows this better than anyone.
Green= The head fake move playing out, creating a bear trap which forces a short squeeze once price moves above the apex of the triangle as that's where most technical traders place their stops, some will place them above the highest point of the triangle.
Eventually price moves higher on a beat in earnings AH April 23rd...
April 23rd After Hours AAPL beats on Revenue and EPS.
Retail looks at earnings as, "A beat is a buy", this is fine with Wall Street no matter if Wall St. firms are long, if they want to sell their long in to demand and higher prices or whether they want to short in to higher prices. However Wall St. looks at earnings very differently. Wall Street looks at earnings and asks? "Do they do better next quarter?" If not, AAPL is a sell, if so, AAPL is a buy or hold, it's not what you've done, it's what perceptions are about what you will do next.
In that light, AAPL may have several problems that were apparent in their earnings:
I-Phone sales were exclusively responsible for the beat as they came in at 43.7 mn units vs 37,7 mn consensus, but I-Pad sales fell short at 16.4 million units vs. consensus of 19.7 million units.
Perhaps more disturbing is the rend in sales, Dec 2013 earnings revealed 51 mn I-Phones sold, March 2014 saw 43.7 mn and the Q2 estimate is for 37.7 million units and that's their main staple.
I Pad sales: Dec 2013 26 mn units, March 2014 16.4 min units and Q2 estimates 19.7 mn, that's exactly (19.4 mn) what was expected for Q1 and came in at a miss at 16.4mn.
Mac Sales: Dec 2013 4.5mn units, March 2014 4.1 mn units and expectations for Q2 4 million units.
We all know AAPL has had a long history of guiding low and then beating guidance, but the trends here don't look great, nor does the I-Pad misses and furthermore, AAPL burnt through cash at $8.2bn for the first time since Lehman, this of course is due to corp. dividends and stock buyback which was recently increased by 50% from $60 billion to $90 billion.
All we have to really go by are the charts and underlying trade. Unlike some members who cashed in big on the head fake entry and holding through earnings, I saw a few things that made me a bit worried about AAPL and closed the long position for a small gain before earnings.
Additional recent posts...
EOD Thoughts Wednesday April 30th
"I'll let you know if I see anything that is screaming, I do like the AAPL short that I posted, but I haven't taken that"
AAPL looking VERY interesting (short) Wednesday April 30th...
"I've been watching this one waiting for charts to align, take a quick look...
So what do the charts show now? For one, they show how powerful whole numbers and Centennial numbers are when it comes to the human psyche, we've known this for a while and often point out, "That's why you always see things on sale for $9.99 rather than $10".
AAPL and $600 just like NFLX and $300 (moved to $299.50 before its reversal up-enough to hit stops at $300) are very powerful magnets for orders to line up at and although I'd never want to show Wall Street my cards in a poker game, many traders place their limit and stop orders on the books where Wall St. and many others can see exactly where the important levels are and today it was exactly where you'd expect (this may be part of what I was seeing late Friday when I said, "There are a lot of charts that look great for an entry, but are missing a couple of timeframes").
This is interesting and creates an opportunity that seems to have been brewing since earnings came out (I think we have Wall Street's perception of AAPL's Q2 earnings), actually there were some signs before earnings, but certainly at them.
Here are the current charts for AAPL (and I think it's clear now why the Q's were the only one of the major averages that didn't have the same clarity of signal later in the day as per this post, Market Starting to Reveal More About Intraday Trade especially considering AAPL's weight on the NDX...)
*Note the 10 min chart is leading negative, but this really didn't take hold until AFTER earnings were reported.
Again we have a leading negative divergence, but on a stronger 30 min time frame.
The only thing missing is the mature reversal process, perhaps a head fake which should all occur over $600 and 1-5 min divergences to fall in line with the 10-60 min negatives.
We have evidence of this in April's Window Dressing (not even a quarterly Window Dressing season). The F_E_D's 1-day Fixed Rate Reverse Repo Operation for April 29th was an astounding $183.3 Billion dollars and by April 30th (moth's end) was $208 Billion or the second highest ever?
Why? Because banks needed the capital to plug holes and dress windows to keep regulators and investors thinking the banks are in much better financial condition than they really are, remember these are 1-day reverse repos and it was month's end , April 30th, I can almost guarantee nearly all of that money was sent back to the F_E_D May 1st. So beyond deciding where to pull liquidity from (perhaps stock holdings that are expected to under perform or perhaps miss their next earnings) and besides the condition of the market, AAPL on its own is already showing some very eye raising signals.
What we need from here for a set up...
The 5 min charts shows the accumulation at the inverse H&S, the 1-5 min charts are at different levels of divergence, but when they all look like the 10 min chart posted above and we have a reversal process in place (and perhaps a head fake move), it might be quite profitable to use any potential head fake move as a short AAPL entry or a AAPL Put entry.
WE'LL WATCH FOR THE SET UP, AS FOR THE INITIAL TARGET
Keep this one on your radar.
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