Wednesday, October 22, 2014

Apple's gap yesterday through the 100.41 midpoint resistance (see inset) strongly implies that its D sibling at 105.64 will be reached. Although a pullback to the midpoint should be treated as a belated buying opportunity, I wouldn't suggest chasing the stock higher. That said, the four labeled peaks are tailor-made for the Hidden Pivot trader who can employ the 'camouflage' technique for getting long. If you understand why, you should go for it! _______ UPDATE (8:13 p.m.): The broad averages pulled Apple back down to earth yesterday when the stock tried to go opposite weakness that surfaced around mid-session. This runs flatly counter to my speculative idea that AAPL might pull the broad averages higher. That's still possible, since yesterday's 104.11 peak fell 53 cents of a rally target that remains valid in theory. However, we'll eschew speculation for now and simply watch to see whether  the 102.44 Hidden Pivot support holds (see inset, a new chart). _______ UPDATE (October 23, 1:59 p.m.): Apple has rebounded sharply today, off a 102.90 correction low to a so-far high of 105.05 that's 59 cents shy of our target. Most longs should have been exited by now. ______ UPDATE (October 27, 8:07 p.m.): Friday's high at 105.49 came within 0.15 of the target flagged above.  Bulls can continue to hold small long positions for a swing at the fences, but I'd suggest tying your shares to a stop-loss based on a downtrending impulse leg on the 15-minute chart. Currently, that would imply stopping yourself out if an uncorrected fall touches 104.52.  _______ UPDATE (October 28, 8:44 p.m.): Still long? Be alert at 107.08, a Hidden Pivot target that looks all but certain to be reached but which could stop the rally cold. You should tighten your trailing stop there in any case. ______

The highest rally target I can project using the intraday charts lies at 1975.00 (although the futures will first have to get past a lesser Hidden Pivot resistance at 1950.50).  Either number is shortable, but only if you are able to cushion the stop-loss with profits made on the way up. The lower target will likely be useful for night owls only, since it lies but 8 points a way at the moment. Please note that if 1978.25 were to be exceeded, it would put a Hidden Pivot at 2037.50 theoretically in play -- a new record high.

The calendar spread I'd suggested buying yesterday for 0.20 was out of reach at the opening bell, since the Dow began the day on a powerful gap higher, up more than 100 points. The spread was tough to buy even for 0.60 at the close, and although it could widen to $1 or more, I won't suggest chasing it. Instead, let's try to get short when our original rally target at 167.05 is reached. You should bid 0.90 for four Nov 7 164 puts, contingent on DIA trading 167.10 or lower.  This is a day order, and you should stop yourself out if the puts trade down to 0.70. Cancel the order if DIA exceeds the target by more than 0.10.  Note as well that a pullback to the 164.65 midpoint pivot would be a speculative "buy". _______ UPDATE (8:20 p.m.): The rally died around mid-session, 82 cents shy of our target. Some in the chat room reported getting short anyway, and the trade looked pretty good at day's end. To those who took a short position home, I'll suggest taking a partial profit asap and using an impulsive stop based on the 5-minute chart. That implies exiting on a rally that gets past the two labeled peaks without correcting in b-c fashion once above peak #1.  _______ UPDATE (October 23, 1050 a.m.): This morning's vicious short squeeze began within a gap to a 166.03 Hidden Pivot midpoint, where DIA consolidated. This implies DIA is headed to exactly 167.77, where a tradable top seems extremely likely. (And, of course, the rally is tradable as well.)