AAPL Update

From the emails I receive, the two stocks that seem to have the biggest hate club or short (actual) interest are NFLX, which I suspect we may have hit right on target this week and AAPL.

I haven't had a lot of AAPL updates this year because I don't like the way it has traded and I haven't seen that high probability, low risk set of charts that jumps off the monitor, the kind of charts I just can't ignore. However people are still interested so I'll update AAPL and show you what I'd like to see as I do believe it is close,  especially after Icahn's scam he pulled in NFLX this week with an almost immediate tweet right after that AAPL was the next big mover meaning he has a position he needs to unwind and needs retail demand to do it as AAPL hasn't broken above the February 23rd highs (2015) since.

 This is a quarterly AAPL chart, each price bar represents 1 quarter of a year. Note volume as AAPL moved up from the 1990's to 2007 with a gain of approx. +1165%. Volume moved up with price, this is healthy and what you want to see.

We have an entire generation of retail and pro traders that learned to trade during the F_E_D's QE/Loose monetary policy period, which badly skewed the market and made volume analysis irrelevant in most trader's view as the only thing that mattered was the F_E_D's balance sheet expansion so in that respect, volume was meaningless, but the F_E_D is backing out of accommodative policy (already ended QE and looking at a Sept. rate hike). This means that volume analysis will once again be exceptionally important and we have an entire generation (a full 1/3rd of Professional traders), who have never seen a rate hike, never seen a bear market and have no idea how to use volume which will be more and more important as the F_E_D's effect on the market diminishes.

I've seen 3 bull markets, 2 bear markets and numerous rate hikes as well as unprecedented accommodative monetary policy that's approaching nearly 600 accommodative actions taken by central banks world wide since late 2008. Just as an aside, THIS IS NOT THE FIRST TIME ASSET PURCHASES / QE HAVE BEEN TRIED. Remember, Bernanke was a scholar, not from a real world economic background and one of his favorite periods by admission and clearly by policy action was that of the 1920's or the "Roaring 20's". Benjamin Strong who was the equivalent of the New York F_E_D President back then was the first to engage in wide, asset purchases and used the roaring 20's bullish economy to justify his new experiment in asset purchases and accommodative policy to legitimize QE as a main stream policy tool for the F_E_D. It's clear that Bernanke was a huge Strong fan from that era, however QE back then worked in pulling the economy out of early 1920's recession after WWI. THE THING BERNANKE AND ULTIMATELY STRONG MISSED (as Benjamin Strong died in 1928) WAS THE CONSEQUENCE OF ECONOMIC TAMPERING. AS MENTIONED, STRONG DIES IN 1928 AND THEREFORE DID NOT WITNESS WHAT CAME NEXT WHICH WAS THE 1929 CRASH AND THE GREAT DEPRESSION.

As many of you know, I believe the F_E_D is hiking rates prematurely from an economic and inflationary standpoint, although rates never should have been at ZIRP and certainly not for 6+ years. Thus it has been my opinion that there's something the F_E_D is more worried about than the damage rate hikes will do to an economy that is already flat-lined (see recent Q1 GDP revisions this week) and is showing NO signs of inflation beyond an asset bubble. 

It's my opinion that the "something worse" than the consequences of premature set of rate hikes which the F_E_D is obviously more worried about, may just be the risk of having let QE go on too long and being backed in a corner with little elbow room when the next recession hits. As the Bank for International Settlements (BIS) also known as the Central Banks' bank, said in its yearly 2015 report, "Leading Central Banks's balance sheets are spread so thin, they don't have the ability to respond to even a garden variety recession" (paraphrased).

In any case, volume will once again be important and those who know how to navigate a market decline and policy tightening, will be the winners. Those who believe the last 7+ years is the new normal are in for a rude awakening, the evidence of a massive bubble is the crowd's insistence that, "This time it's different". Over hundreds of years and dozens of major asset bubbles, the one thing they all shared was it was never different, only thought to be.

 This is AAPL's 2014 trend line, still in effect and the significant fall off in upside Rate of Change (the indicator in the price window in white).

As mentioned above, AAPL hasn't made a higher high since February 23rd, which also sets AAPL up for a nice head fake move as it is showing a clear resistance level at $133 on the close. Note the middle arrow and the massive churning event with a bearish engulfing candle that failed above resistance on Huge volume.

The daily 3C chart shows strong distribution in AAPL and we already know some major institutional and hedge fund players have sold ALL AAPL. It does look like AAPL is in the middle of a reversal process (yellow), but the rounding igloo top usually comes with a Chimney/head fake,

The 60 min chart shows several positive and negative divergences, but also a lot of "in line" confirmation at the green arrows, not the strong divergences that I'd like to see for a position right here.

Remember the accumulation throughout the market on May 6th and 7th, I covered it about 100 times, there it is in AAPL as well.

The 10  min. chart shows the same accumulation at the 6th and 7th of May, like a lot/majority of assets then. There's also some recent negative activity, but it's not jumping off the chart for me.

Interestingly, the 3 min chart which also shows the accumulation at June 15th lows (as this is the day we forecast a bounce and numerous assets hit support while retail sentiment was hugely bearish) is showing VERY recent short term accumulation to the far right as if the Icahn tweet that AAPL is the next big mover is going to see some evidence so he can sell out of the position the same way he used NFLX's split and gap up this week to close his entire NFLX position. Remember, Wall St. only tells you what is useful to them, it's rarely useful to you. Watch that Cramer / Street video for the low down, it's one of the best videos and bits of reality that Cramer ever shared, probably regrets it now.

 The 2 min AAPL chart shows the same. If this led to a bounce, I might be willing to look at a short or some puts so long as I see distribution in to the bounce.

There's one thing I saw intraday on the fastest chart...

The 1 min chart started falling apart a bit, this is where we'd first see it as this is the most sensitive chart. There has been some recovery since this capture so my guess is AAPL will see some upside very soon, if not today, perhaps Monday morning.

As far as a few other charts...

 I have set our X-OVer trading system to a longer term 3-day chart. The long signal was given at the three white boxes (one in each window) in 2014, since then even with some moving average whipsaws (which is the reason I created this system, so you'd not be misled by whipsaws in moving average systems) the custom indicator in the middle hasn't wavered once and remains in a long signal position. If the price moving averages cross down (yellow below blue) and RSI which is just crossing below 50 hold, then we'll need the custom indicator in the middle window (yellow) to cross below its 22-bar moving average (blue), then we'll have a confirmed sell/short signal in AAPL.

In addition, other than a break of the 2014 trendily around the $125 area, my custom Trend Channel has a current stop out at the $123 area, if those levels are broken, AAPL will have put in a significant enough change of character that I'd be more comfortable looking for a downside change in trend. Until then, I'd rather be patient and wait on the sidelines with AAPL. I don't feel there's good evidence beyond a very short term positive divergence to trade AAPL long, it runs counter to everything we have seen in the market, but perhaps a short term long develops. Other than that, like I said, patience pays.