AAPL has been churning for a month, generating a series of stochastic peaks on the daily chart that could spell trouble over the near term. The picture would grow even more more menacing if the stock were to roll down from these levels, since the corresponding stochastic peak this would create would diverge from the two that preceded it. We’ll wait to see how things plays out over the next day or two before we draw any conclusions, but it would appear that bullish fervor is weakening and that the stock is being deftly distributed by the Masters of the Universe. _______ UPDATE (Feb 19, 8:15 p.m. EST): Bad news from AAPL has produced a predictable response: a two-day short squeeze that has brought the stock to within inches of a new all-time high. This is funny and even entertaining, but also instructive as to Wall Street’s mindset and the disease that has been driving the bull market for months. I haven’t given up yet on the idea that price action since around mid-January has been massively distributive. We may find out within the next week or so, but in the meantime I’ll recommend bidding 0.40 for a few Feb 28 305 puts just in case, good through Thursday. _______ UPDATE (Feb 20, 6:26 p.m.): The puts climbed to 1.30 today on unusual weakness in the stock. Alas, we were not aboard because the options had traded no lower than 0.49, missing our cautious bid by nine cents. Even so, I’ve advised subscribers who got short on their own initiative to hold onto at least a portion of their positions in case the downtrend gains momentum. Here’s an updated chart that suggests AAPL would need to fall hard to fully correct overbought excesses that built up over the last two weeks. ______ UPDATE (Feb 24, 1:21 p.m.): Hope you held onto your short positions as advised (and reaffirmed during Friday’s online presentation concerning stochastic divergences. I’d said AAPL would need to plunge severely to get its daily chart fully oversold, and so it has. The stock was down as much as $24 today, pushing those puts that once sold for 0.49 to 16.00 Please note, however, that I’ve flagged AAPL’s resilience today in the Trading Room with this post at 12:55 pm: Notice that AAPL, the most fervently owned piece of the ‘smart money’s’ portfolios, is not relapsing with the broad averages at the moment. It looks like Buffett and DaBoyz have decided to hang tough. (Shades of J.P. Morgan!) Let’s see if AAPL, all by itself, can reverse the selling of stocks ’round the world. It remains the only stock we need watch to get it right.)
