Thursday, August 21, 2014

Apple's high yesterday occurred just 2 cents from the 101.07 target shown, but on the weekly chart, the stock is already through a major midpoint resistance at 99.79 associated with a very long-term D target at 144.56 (A=11.17 on January 23, 2009).  I am calling attention to this because a blowoff of that magnitude in the stock would almost surely be part and parcel of a steep rally in the broad averages toward a major top. More immediately,  I'd like to see AAPL consolidate down to 99.79 after pushing decisively above it, but we'll be watching the lesser charts in any case for signs of significant buying power percolating beneath the surface.  One other Hidden Pivot resistance must be noted: 103.07, from the daily chart (A=89.65 on 6/25; B=99.44 on 7/29).  If it and the one at 103.07 are easily conquered, it would increase the likelihood of a blowoff to 144.56.  _______ UPDATE (August 26, 11:55 p.m. EDT): Apple is slipping beneath a 100.91 midpoint support (see inset, a fresh chart), implying it's about to fall to the 100.46 D' sibling.  Short it via camouflage on the 5-minute chart, using Tuesday's lows to establish an a-b impulse leg.  If you're short when 100.46 is hit, reverse the position and go long aggressively with a tight stop-loss. _______ UPDATE (Sep 1): The actual low occurred at 100.70, and although that's within 0.24 of the corrective low flagged above, I'll assume no subscribers got aboard unless I hear otherwise.  There are more bullish targets above that I could bring clarity to at the moment, but the bottom line is that you should bring a bullish bias to any trades, especially since there's potential for a ride to as high as 144.56. ______ UPDATE (Sep 3, 10:49 p.m.): The stock has plummeted nearly

Judging from the ease with which NFLX pushed past the midpoint pivot shown, more progress to at least 488.55 seems assured. With $16 of potential upside from here, we could get long using a $5.30 trailing stop to mechanically manage dynamic risk. That would keep risk:reward in the 1:3 relationship that I always advise. However, the trade will have a better chance of succeeding if we initiate at a swing low coinciding with a midpoint pivot or D correction target.  However, any such opportunities we might have looked for yesterday would have proven tricky, since corrective targets were not precisely hit (owing in some measure to the fact that none of the downtrending ABC patterns shown contained a valid impulse leg).  If you're more comfortable boarding with-the-trend (i.e., the uptrend), then camouflage is the best way to go, presumably using an entry signal on a chart of 5-minute degree or less.

Mr. Market served up a new all-time high with a characteristic dash of humor yesterday -- i.e,  in the closing seconds of the day. Actually, he went one better than that -- literally -- by creating the new high just a single tick above the old one from July 24. Do we dare short this short-squeeze-powered monster? I'd raised the prospect in yesterday's tout, noting that the hysterical price action of trading vehicles pushing above old highs (and below old lows) is perfectly suited to our 'camouflage' entry tactic. As it happened, we would not have needed camouflage, since a 1986.25 target I'd posted in the chat room an hour ahead of Wednesday's climactic upthrust nailed the intraday high within a tick. But staking out a short position at the final bell is asking for trouble, and so I advised doing so only to subscribers able to monitor the trade, and to cover it if necessary, during the night session. We should remain wary nonetheless of a bull trap, since the hubris attending a breakout to new all-time highs is always going to coax forth a dangerous mix of daring and complacency. We went short in July at a 1984.25 Hidden Pivot target that I'd been drum-rolling for weeks, but we covered the position the next day when the futures head-faked to a (very) marginal new top at 1985.75. Picking the top of a bull market that hasn't had a significant correction in...years is always going to be challenging, and my gut feeling is that the actual high will be seen in retrospect as having been more or less unshortable. We aim to keep trying, though, simply because we can, perhaps even making a few bucks on pullbacks that prove to be short-lived. With a free trial subscription, you can

We spent the entire hour chasing Netflix lower, zooming our way down to the 15-second bar chart in the process. The niggling details of finding tradable patterns at that level are surely worth pondering, but the more valuable insights came from psychologizing the dips, twists and turns. The ending is the punchline to a joke that all traders have been the butt of at one time or another, but I won't spoil it for you. Suffice it to say, NFLX bounced from a low that was almost, but not quite, perfect.