AAPL Update

This is probably one of the most recent posts from Feb 26th that covers some of AAPL's longer term charts which are not as interesting to me at this point as the shorter term charts, as in trading positions and leverage (options) for reasons I made clear yesterday, I think AAPL if it is topping here, will be choppier than many other assets that have already topped and are better suited to trend trades. The post, AAPL Position Management

Now since closing the AAPL puts yesterday and considering re-entering them on any strength, I've taken a look at AAPL this morning on a move lower that to me looks like it may end up being a small inverse H&S base, similar to the recent top area that looks a bit like a H&S top.

 This is the trendline I drew in last week and have been following since. Note the spikes in volume on the first two areas, each of which looks like stops were hit. Normally the second break of support wouldn't have that kind of volume, but it looks like traders bought the dip after the first break of support, thus the stops were there again. In white, this volume looks a little more to me like capitulation, of course short term as it's only a few hours, but that would fit with a bounce that we can short in to.

In case you are not aware of the meaning of capitulation, it's a selling climax in which just about everyone who is going to sell does so and you'll see this occur on a 5 min chart like the one above or on a weekly chart in a full blown primary trend bear market. The point is, when it occurs, you are usually close to a bottom, but in this case, it would be short term capitulation and a bottom that is appropriately scaled to the bounce theory for AAPL and the general market.

We know AAPL is a bellwether and has tremendous influence over the NASDAQ and soon the Dow, but in general most stocks move with the market so you can take a lot of the information in particular stock updates and generally apply it to the market, this isn't a hard and fast rule, but I'd say about 2/3rds of the stocks out there are correlated to the market.

 This is a closer look at what I suspect is a capitulation area for AAPL. If you recall the reason I suspect now is a perfect time for a market bounce (shown earlier with the SPX and Dow is in the same boat) which is totally normal, heck, the market is too round at the moment (see the chart below), then you'll soon see that AAPL is in a similar situation and that's usually not coincidence, that 's usually the high degree of correlation between stocks and the market,

This is the area in AAPL I have been watching as a potential small top that could be leading to a much larger one, but the point is if we look at this as a H&S top (rightly or wrongly), the concept of a shakeout of new shorts is exactly the same as the support/neckline is broken.

You may recall the 3 places I'll short a H&S top and the one place I will not, this break below the neckline is the one place I will not enter a new short and usually I'd want to be wrapping up any short term positions like yesterday's puts (even though this scenario had nothing to do with closing yesterday's AAPL puts, but it worked out great in any case).

The head fake/bounce would, in our H&S shakeout concept), move above the neckline and probably the right shoulder highs represented by the yellow arrow and trendlines.

Could AAPL be a worthwhile long/call position here? Maybe if the charts improved dramatically, but as the market has entered stage 4 and in 2 of the major averages wiped out not only the entire head fake move, but all 2015 gains, this is not an ideal trade as it runs counter to the prevailing trend which I feel absolutely will reassert itself and continue to much lower levels. Thus any AAPL piggy back long is by nature, speculative.

Market is too round, too predictable, time for the market to mix it up...

Until today where the market is treading more laterally (short term base-like), it was way too round and obvious, obvious markets are not profitable markets. Take the October lows for example when EVERYONE and their uncle who's not even in the market were bearish, so much so that certain long term sentiment surveys were posting all time highs in bearishness. You may recall me saying that despite how I feel about the market, that there are too many people calling a top and for that reason, the market will shake it up and we predicted a "face ripping rally" before we even had the 3C proof. If everyone is on the same side of the market, no one makes money and that's what was happening here with this very predictable rounding.

AAPL to a small degree looks similar.

We do have some improvement in the AAPL charts, something we didn't have a lot of yesterday as I explained a lot of the reasons for my decision yesterday were based on other factors like price and volume action.  3 min-

While I'm not making any case right now as far as AAPL goes with long term charts as I feel there's probably some more lateral choppiness in finishing a top, I am interested in the shorter term and this 5 min chart has been in line on the downside (3C price confirmation) for a while, since the negative at the top. I'm sure you can see the current positive divergence forming. While this divergence won't trump the larger picture in AAPL, it is interesting on a shorter term options type trade basis.

I think the bottom here is a little too narrow and AAPL probably has more work to do, but that's of no concern as I'm not interested in AAPL long here (at least not right now), thus whatever it does in either making a wider base or popping to the upside is irrelevant to me, I'm interested in re-establishing the AAPL short/Put position closed yesterday.

If that information isn't interesting or useful for you with regard to AAPL specifically, remember in general you can apply the same to the broad market.