AAPL Day Trade

If I have time to pull it off, I'm going to try to get some AAPL calls for a DAY TRADE/VERY SHORT TERM TRADE. This changes nothing about how I feel about AAPL and wanting to add puts at higher levels, just a quick trade if possible.

 Larger triangle

These are intraday positive divergences, the longer term or trends of these charts are just as negative as they were earlier, this is short term reflection only.

Currencies...

Yesterday I described the Euro strength (market positive) as transient and $USD weakness as the same, these are part of the closing window of opportunity to sell/short this market. Take a look at the changes .

 The $AUD is very weak today on the SPX move, this is probably the worst sign for the market among currencies.

 Longer term, every time I can recall that the $AUD has dislocated from the SPX trend negatively it has brought a downside reversal, once at the June 4th lows the $AUD dislocated positively and the market reversed to the upside. This is not only reflective of carry trades on or off, but like commodities, shipping, etc, the $AUD is a good barometer of the health of China and Japan.  I like FXP (short China, but I'd wait for a pullback first).

 The Euro's support of the market isn't there today as it runs in the opposite direction from the SPX.

 Damage seen yesterday in the Euro, which is why I called it a closing window, continues today. Gold, equities and oil should be among the assets that will feel the pain from a lower Euro.

The Euro 5 min chart, weakness throughout longer term.

 The $USD (rising is a market negative and for oil as well-also tends to be a QE-off sentiment indication) , the intraday chart is seeing more strength building from yesterday. Oil is one to take a look at, USO (short)

$USD 60 min broke just under support, great for clearing stops and a head fake move, the 60 min chart is leading positive.

Again, this is a broad risk asset negative for stocks, commodities/oil, and typically precious metals. A move above the $22.50 not only moves above support which we are already above, but knocks out the bearish descending triangle price pattern.

AAPL Can Still Breakout

This would likely be a fantastic trigger event, I think it can still do it and it may be the only thing to halt the slide temporarily. I'm still holding patiently for an AAPL B/O to add to Friday's new short/Put position

Lots going on

There are so many things happening its hard to keep up with them, Europe is in disarray again as Spanish regions seek bailouts, the F_E_D's Beige book makes me happy I entered the GLL (GLD 2x short) as the report is QE negative.

The risk asset layout has lots of interesting things happening, right now AAPL has a larger triangle, if it doesn't break to the upside, the market is going to have difficulty as the underlying trade deteriorates in most timeframes in most averages, but badly in the IWM and the QQQ, the former leaders of underlying strength.

I was going to post some of those charts, but I think my time is better spent elsewhere at the moment.

Quick ES Update

After looking at ES and VWAP, I'm not surprised the signals are coming in negative and suggest at least a consolidation if not a pullback.

One thing I'll note is last week we started seeing what I can only describe as a persistent negative divergence in ES, usually the 1 min chart calls intraday moves pretty well in ES, but we have seen this "persistent negative divergence" a few times in the past, each time it was strange as I had not seen anything like that before, each time also led to a significant reversal down in the market. That divergence is back.

 This is that persistent negative divergence. I am VERY happy to see early strength, it is what I was looking for yesterday, but we got a triangle instead which was probably helpful to today's intraday move up. The persistent negative divergence is really only something I've seen on ES charts before, I'd have to think that it is persistent distribution in to higher prices which may be why the technically "bullish" triangle ended up forming yesterday, what retail sees in price and price patterns is often very deceptive or misleading.

 I suppose it's not too big of a surprise that we get some consolidation or pullback at the daily ES VWAP's upper 2nd standard deviation.

Here's the weekly VWAP on a hourly chart, the area in red is what I suspect was the actual top or reversal area, as I often remind you, the market is never going to make anything easy. Many of us who have traded for over a decade remember when a reversal was a clear reversal, now the volatility is so high on low volume (we saw another yearly record low in NYSE volume this week) that it's easy for Wall Street to keep traders guessing, especially if they rely on price alone or the standard price based indicators. Wall Street creates enough chop to basically allow anyone who has any opinion to look at a price chart and find a reason as to why their opinion is correct, but only truth is true, the volatility moves that are like staring at clouds and looking for pictures are deception, there is real activity, real changes in character under way, price alone can no longer show you this until we reach the point at which there's not much to be made. If you wait for price/trend confirmation you missed the trade.

Market Update

We should get at least a consolidation/break in the intraday move up in the averages here, if we get a consolidation, it will need to be watched for signs of falling apart or looking like it can move higher.

Most of the averages have seen pretty significant deterioration on this move, but AAPL is still in consolidation mode, the longer it consolidates, the stronger any directional move will be.

I  have more assets to check like the risk layout, FX, volatility and treasuries

GLD Charts

There is a level in which I would add GLD puts, we haven't seen that level, I'm not sure that we will, but I want to take advantage of the signals in GLD now and not miss an opportunity if the put position that I'd like to add doesn't pan out.

The GLD charts and if you are wondering what GDX (Gold miners) look like, the answer is I considered shorting the miners as well via long DUST, perhaps I'll add that as the second half of the GLL position, I'm not sure yet, but the answer is GDX and GDXJ are also not looking good here with GLD.

GLL is in the equity model portfolio and is a leveraged position, but I would not choose GLL for a core short position in GLD. There are some longer term charts that seem to be shaping up for GLD, we are not there yet as far as a long GLD trade, but I also don't want a core short in GLD as long as there are longer term signals that are contradictory. I'm hoping GLL will give me some decent gains quickly. I'd prefer a Put position in GLD, but I have a price level in mind that I want to see as a concession before entering a 10x leveraged position.

You will notice that the theme I have shared with you via last night's post showing Financials, Energy and Tech as well as numerous other charts including AAPL is a theme that is present in GLD as well.

The GLD charts....

 the 60 min chart in GLD has actually been quite timely, on 5/30-5/31 the hourly chart went extremely positive very quickly, I mentioned the trade idea although I didn't take it myself to my regret, that's to the far left, it was quickly sold in to price strength. GLD broke out above resistance in the $158 area and the 60 min chart went leading negative in an area that looks to be a head fake move, the last decent head fake move in GLD was in late February, it lasted (the head fake) 6 days before breaking down below the breakout level with a -5.3% move in 1 day that gained us a 215% profit in days and went on to lose over 14% the next couple of months, but the majority of the move was 1 day and a result of a head fake move.

 Here it looks clear we have another with  another leading neg. divergence on the 30 min chart at the breakout.

 The 15 min chart is leading negative and this is the reason for opening the GLL partial position now.

 The 5 min chart's trends ( as well as every other timeframe below 5 mins) went leading negative on the breakout, again the sign of a head fake move just like in February.

 Close up it looks like we can still see higher prices in GLD as there is a small resistance zone formed, that's where I'd enter additional put positions.

 As mentioned above, all timeframes are showing the same leading negative divergence on the breakout move, making this a VERY HIGH PROBABILITY head fake move, I don't skip signals like this.

 The close up 1 min intraday is also positive/leading positive so there's still hope that we get short term higher prices and a new put position can be entered.

I'd probably want to see at least $162.25 before considering entering an additional put position, which would be a move above very recent, but not very defined resistance, in essence a smaller head fake move, but one that would give a price concession, lower Put prices and lower risk levels.

Adding GLL Long

I'm adding a speculative position in GLL long (Ultrashort Gold) in the equities model portfolio.

This is 50% the size of a normal position, I may add to it on price strength or some other scenarios, but for now, it's a spec. long position in a 2x leveraged Gold Ultrashort.

Charts coming.

On our member's TLT trade...

I just heard from him after the post, Sam said...

"On that head fake exit I actually make 200% on those calls."

Fantastic! Volatility is up, premiums are rising on options, I'm willing to bet Sam's entry was at lower volatility (cheaper calls) and he sold at the exact right spot with only minimal guidance from me, just some 3C updates, he figured out the head fake area himself. 

While I'm always willing to help those who are really serious about what we do in any way I can, my ultimate goal with Wolf on Wall Street is to share concepts such as the head fake/reversal, let you know why they are there so frequently and on every timeframe and then let you apply these concepts to your own trading style. This is where I believe members will find the most success and that's all I want to see is normal, every day traders who don't have inside information, who can't manipulate the market, go out there and take Wall Street's money rather than see them take yours.

Awesome job Sam-200% in TLT-oh my...

AAPL Update- Concept Post

Even if you aren't interested in AAPL, I think there are some good concepts that the AAPL charts relay.

On Friday I started an Out of the Money Put in AAPL to try something different as I usually prefer in the money. The position was 50% to have some coverage going in to an uncertain weekend, but left enough room for higher prices which is what I expected. I believe if you look at the charts you'll understand why higher prices were in my opinion, a good bet. Please do keep in mind the severity of divergences all over the market, not just AAPL, the $AUD Carry Trade being turned off (institutional money is closing the carry trade they use to finance purchases and rallies) and keep in mind the hedge fund redemption situation which may be one of the worst in the history of hedge funds. Finally keep in mind what happened when Paulson's Advantage Plus fund returned a roughly 50% loss last year and how his only profitable position in his top 5 holdings was GLD, then look at GLD through the month of December right before redemptions came due at the new year, that's what 1 hedge fund can do to a stock to meet redemptions, AAPL happens to be the largest institutional/hedge fund holding, imagine what a pack like that could do with 89% under-performing the SPX and redemptions starting as early as September.

Now the charts, but please keep in mind what the situation is, what history tells us and try to think like a fund manager who would rather be part of the 89% under-performing group than the bottom 10%, this is why hedge funds all buy the same stuff, herd together, you wouldn't want to take any risks either and probably be content hanging with the crowd if you multi-million (some hundreds of millions) job was on the line, it's a lot easier to justify why your under-performance is on par with most funds than it is to explain why you were taking chances and ended up under-performing the herd.

Understanding these dynamics gives you a different perspective when looking at the charts.

 Take a look at AAPL's volume...

 A closer look reveals  that volume was falling way off, there was a large accumulation zone at the May lows, but nothing like it since, it's as if the shares were accumulated and sold over the course of months, but volume started running out, demand for AAPL shares in the size institutions needed to sell dried up. At the white arrow is the concept of a bullish reversal candle on high volume, this is almost ALWAYS a reversal sign 9same for bearish candles and high volume and on any timeframe). In August volume fell way below the 50 day average, only after AAPL crossed above resistance and the psychological $600 (century mark) did volume pick up, then it picked up much more in to the triangle that formed and broke out (larger of the two) which formed right above the move above the April highs to all time new highs.

 Look how volume falls off until resistance levels and price patterns are broken, this is what brings in retail buyers, this is what is needed to sell large positions, demand and higher prices (which go hand in hand). Every time volume fell off, there was a breakout move.

This is why I'm betting that the smaller, most recent triangle sees a break out move, that's where I want to add the second half of Friday's put position.

Look at volume on the breakout of the larger triangle, price looked wobbly this morning, but I stayed patient betting it will move higher, for institutional money, they need demand to move higher even more than they need price to move higher.

 On the 1 min chart there was a very small positive divergence, I believe it is there to form the triangle and as the triangle becomes apparent, buyers step in as some will buy the bullish price formation.  Others will wait for the breakout, the majority will wait for the breakout.

 Look at the distribution on the 2 min chart as the large triangle is formed and then how it gets worse on the breakout from the triangle.

 The 3 min chart shows distribution as the apex of the large triangle takes shape (meaning it is closer to the breakout move-this use to be where I'd buy too), after the breakout distribution is even worse as volume/demand rise.

 On a 5 min chart distribution is apparent, but only makes new leading negative lows after breakouts above levels like $600, resistance and the large triangle price pattern.


The 15 min chart shows 3C momentum to the downside pick up as volume picks up-look at the charts above with volume, this is the door that is open.

 The 30 min chart shows the initial break in AAPL which was sharp and where the core AAPL short was initiated, you also see the heavy accumulation at the May lows, distribution on the move above the century mark/$600 psychological level and recent leading negative 30 min divergences at the triangles.

 The 60 min chart goes deeply leading negative on the breakout from the last large triangle.

Looking at the VERY big picture, this is the FIRST TIME SINCE 1985 that AAPL has gone negative on a weekly chart, you can see multiple large accumulation areas, the last being 2009, since then not only negative, but leading negative on a weekly chart.