Apple Computer

The criminally engineered, $8 shakedown on the opening bell Friday missed my 176.93 target by a hair, setting up a possible short-term bottom. If so, AAPL looks like it will ripen for 'mechanically' shorting at the green line (x=191.04), even if a subsequent relapse only delivers a one-level profit.  In retrospect, my decision to switch to MSFT as our one-size-fits-all bellwether appears to have been sound. The stock has clearly lost its mojo, even if it still moves with the heft of a blue whale.

The 'mechanical' short I mentioned here last week came home to roost with a pop through the green line (x=193.54) on Monday. OE (Option Experiment) participants already hold a small bearish position in the form of a vertical put spread, but it expires on Friday and won't come alive unless the stock tanks $10. That's hardly impossible, but I was reluctant to open a new front ahead of the weekend with an additional position.  We should trade with a bearish bias because of the 'mechanical' signal, so stay tuned to the chat room and your email notifications if you want to keep apprised. My strong gut feeling is that AAPL is much too hired to hoist itself above the 199.62 point 'C' high of the reverse pattern shown without pulling back first, possibly sharply.

Just a small push this week will bring AAPL up to the green line, where it would become a promising 'mechanical' short. I would expect a profitable pullback to at least the next level, p=187.47, but I doubt the stock is ready to fall into the abyss. To remind you: The green line (x=193.54) is not a support, resistance, Hidden Pivot or target, just a place at or near which we sometimes initiate trades.  We'll look for an opportunity to do so with a risk-averse 'camouflage' set-up when the stock reaches the line, presumably on Monday if Friday's nutty wilding spree continues.

A moment of truth, if not THE moment, likely impends as AAPL rises toward the green line. Assuming it gets there this week or perhaps early next, the stock would become as juicy a 'mechanical' short as we could hope for. If, instead, it gores bears with a move above the pattern's 'c' high at 199.62, that would surely be bullish, notwithstanding the head-fake possibility I've warned about in the ES tout (see above). A third possibility is that AAPL will fall to d=175.31 of the reverse pattern. That would create a bottom-fishing opportunity that we should not pass up, even if the expected bounce proves to be a short-lived last gasp for this aging bull.

Sellers obliterated the 187.47 'midpoint support' of the pattern shown last week, clearing a path for more downside to at least D=175.31. Any one- or two-level rally in the meantime would set up an attractive 'mechanical' short.  Bottom-fishing at D will be a high-odds play as well, although the pattern, even though an rABC, may be too obvious for a penny-ante stop-loss. In such situations, shorting puts is likely to be a better tactic than buying calls.

There are numerous conflicting currents acting on AAPL at the moment, but I've settled on a corrective pattern on the daily chart that seems clear enough to rely on in the days ahead. A bounce precisely from p=191.37 would help us get oriented, but any decisive breach of this support either intraday or on a closing basis would portend more slippage to as low as D=188.07.  We'll be entering a new year, an event that should have no particular impact on stocks but which often has ignited powerful rallies. In any case, the pattern shown should be easily tradable in all the usual ways, since it began with a 'textbook' impulse leg. _______ UPDATE (Jan 2, 12:15 p.m.): This morning's take-no-prisoners opening shredded every minor 'D' target/support on the hourly chart, generating an impulse leg in the process. This implies that any rally that falls short last year's high at 200 is setting up another leg down.

The stock has been on a short signal since it fell $4 to 195.57 to a week ago. There is implied minimum downside to p=191.52 for this presumptive correction, but a decisive breach of this Hidden Pivot support would portend more slippage to at least p2=187.46 or even to D=183.41. Since the broad averages will follow the stock whichever way it goes, we'll monitor price action at HP levels closely. AAPL has returned to normalcy, more than keeping pace with MSFT in the face of news that would rattle buyers were they not predominantly heedless psychotics and buy-and-hold chimps who purport to 'manage' portfolios.

It wasn't long ago that we were reading about a menacing slowdown of iPhone sales in China, but the news evidently has been forgotten with the stock's push into new record territory. It has trailed Microsoft for a few good reasons but now appears eager to make up for lost time. Most immediately, that would portend a run-up over the very near term to 204.01, the Hidden Pivot target of the eye-jarring pattern shown in the chart. If bears push past it easily with feverish short-covering in the days ahead, it would bring into play a 253.96 target derived from a lower 'A' at 53.15 recorded in March 2020.

Although AAPL has trailed the meteoric MSFT, the stock could play catch-up with a blast to as high as 219.93, the target shown. It would presumably get there within a day or so of MSFT's achieving a corresponding target at 430.58 that has been drum-rolled here. A breakaway move this week above p=192.8 would be a tell hinting of buying power sufficient to put a worthy finishing stoke on the stock's spectacular rise.  Any trades will have to come from the intraday charts, since we are unlikely to be gifted with a pullback sufficient to generate a 'mechanical' buy on a chart of larger degree. _______ UPDATE (Dec 13, 10:58 p.m.): Are these guys good, or what? AAPL's handlers have turned murderous tonight, brazenly pushing the stock into record territory in after-hours trading. There isn't much left to slow it down now.