Tuesday, April 15, 2014

Three weeks of ho-hum price action have left the May contract with a mildly bearish bias, although any weakness would likely pick up support from lows near $19 recorded between early December and late January. Alternatively, I'll stipulate that the futures must close above the 21.168 midpoint pivot of the pattern shown before we infer that bulls are emerging from their torpor. _______ UPDATE (6:02 p.m.): Yesterday's dive to 19.220 found support just above January's 19.030 low, but the subsequent bounce is as yet insufficient for us to conclude that the worst is behind.  The very lesser charts would turn short-term bullish today on a print at 19.675, but anything shy of that should be regarded as shorting opportunity.  All that aside, night owls could attempt bottom-fishing at p=19.335 with a stop-loss as tight as three ticks (see inset, a new chart). _______ UPDATE (11:29 a.m.):  This trade worked with absolutely perfect precision, since the overnight low was 19.235 -- TWO ticks beneath where I'd suggested putting your bid. A 48-cent rally ensued.  (I also drum-rolled the trade, although without giving the exact price, in 'Today's Action'. If you filled the order please let me know in the chat room so that I can establish a tracking position for your further guidance.

Apple has been in a dither for the last two weeks, with bears somewhat getting the better of bulls as far as the dueling tracks they've left on the intraday charts. Since both have spent most of the last two sessions beneath the midpoint support of the pattern shown (i.e., the red line), we should regard it as bearish distribution rather than bullish accumulation.  That implies about $13 of downside potential from these levels, but it is probably best traded via camouflage (that is, by leveraging small, downtrending ABC patterns on the very lesser charts) rather than initiating with a limit order. ______ UPDATE (5:58 p.m. ET): Yesterday's $11 plunge may be as close as Apple gets to the target shown in the chart.  If sellers get second wind, however, shorts should play for a fall to exactly 507.42.

Yesterday's price action was the stock market's equivalent to rectal itch, about which no one but a proctologist at a medical meeting should have much to say. It provided no clues about whether the next big move will be higher or lower; it was best traded by betting against the continuation of any trend that looked like it was about to become even remotely interesting; and it pointed to no particular outcome on Tuesday. That said, I have reproduced a daily chart to remind you that the bear leg begun last Thursday is strongly impulsive. Bulls could dispense with the threat thereof by rallying this vehicle to new record highs, which would exceed the requisite two prior peaks on the daily chart. Failing that, however, they will need to make their stand at the midpoint pivot of whatever follow-through c-d decline is about to occur. I have sketched this out, since price action at the still undetermined 'p' will be crucial to our understanding of the much bigger picture. _______ UPDATE (11:04 a.m. ET): Assuming today's 1837.25 high holds, the chart accompanying this tout projects minimum downside to p=1805.00, or a worst-case low over the near term at D=1773.00. This morning's 'obligatory head fake' was not exactly unexpected.