Tuesday, October 9, 2012

Institutional investors' habit of accumulating Apple shares without ever selling is so deeply ingrained that we should look for a buying opportunity ourselves when this correction has run its course. The most logical price for that to occur would be at the 619.83 target of the pattern shown. Accordingly, I'll recommend buying a single October 640 call if and when the stock get within 20 cents of the target.  Stop yourself out if the option trades for $1 less than you paid.  Our goal will be to leg on a riskless butterfly spread if the stock bounces from the target as we might expect.

The euro charts give us several well-defined patterns and numerous possible trades.  Since late July, the larger trend has been bullish, and at the moment the two strongest patterns give us twin pivots at 1.3137 and 1.3144, an area which might resist the euro should it rally from here.  A short sale of that double-pivot should use a stop-loss not below 1.3152.  In between here and there is a midpoint pivot at 1.3041.  The larger of the two patterns projects as high as 1.3476.  In the event that the euro heads down, there is a midpoint pivot at 1.2895 which might be a buy.  The stop should be below 1.2890.  (Posted by Doug “harry” McLagan)

A series of lower highs and lows since July lends weight to the possibiity that a major top is in.  Although we can look for further corroboration in the lesser charts, or alternatively for signs of a bullish turn, the daily chart (see inset) should be our standard.  In that regard, only an unpaused upthrust exceeding at least two of the three prior peaks ahown would qualify as a game-changer. Accordingly, we can set a screen alert at 151^30, just above peak #2, to tell us if bulls have sprung back to life. Click here for a free trial subscription that will allow you to follow Rick's Picks' trading recommendations in real time.