Apple Computer

Uh-oh! Again. The stock's $16 plunge today, exacerbated by a gap through a key Hidden Pivot support at 146.37, has all but clinched more downside to 133.38 (see inset). At that price Apple, until recently the most valuable company in the world, will have shed 43% of its value. This is the wealth effect in precipitous reversal, an implosion that foreshadows much larger losses that eventually will be felt as the bear market pulls the broad averages well below 'fair value'. I'll warn you in advance not to get sucked in if the stock rallies sharply without having reached 133.38. Indeed, if the bounce were to hit the green line at 152.87. that would generate a 'mechanical' shorting signal.

Apple shares have plunged on news out after the close that China's economic slowdown will adversely impact earnings. The stock dove nearly $14, bottoming so far at 144.51, when trading resumed at 4:50 p.m. after a brief halt. The wizards on the buy side at the moment are not big risk-takers, so we can infer that they think the shares they are sucking up between $145 and $147 are a pretty good deal. Even so, there's an unfulfilled Hidden Pivot target at 143.36 that I expect to be achieved before sellers are spent, and if it fails we could see still more slippage to as low as 138.20. All of this matter a great deal, since, as I've repeatedly emphasized, the broad averages can't rise if AAPL is falling. This implies that there could be a juicy contrarian trade in index futures if AAPL seems to have put in a bottom overnight. The E-Mini S&Ps, for one, dove while trading was halted in AAPL, but they are now spring-loaded for a nasty short-squeeze rebound if it appears the worst of the selling is over. Plan accordingly.

The previous forecast called for a moderate but not explosive rally on the final trading day of 2018. That's exactly what happened, but because AAPL looked so punk, I doubt the uptrend is going to get legs. DaBoyz held the broad averages buoyant in the early going for just long enough to trigger a flurry of short-covering, the only buying strong enough recently to sporadically counteract tax selling.  AAPL was acting pretty subdued, however, implying there are still plenty of sellers around even though the stock has come down 37% since topping in early October at $233. If it gets second wind and blows past the 160.57 target shown in the chart, the bullish case for the near term would strengthen. In any event, you still need look no further than AAPL to know what is on the shrunken, fevered brains of the portfolio managers. If it is going nowhere, than neither will the broad averages.

It's hard to imagine AAPL not bouncing from the 145.66 target shown. (It was proffered here earlier as a minimum downside objective.) Monday's plunge came within 45 cents of this Hidden Pivot support during the holiday-shortened session -- close enough for us to infer that a bottom of at least short-term importance is in. If so, expect the stock to lead the broad averages higher when trading resumes on Wednesday. This has been a risky assumption for the last two weeks, to put it mildly, since both AAPL and the broad averages have traded as though weighed down by mountainous supply. Rallies have stalled and then reversed punitively, while days that have begun with weakness simply grew worse. My gut feeling is that tax selling will keep pressure on shares during the final week of the year. If they are going to rally, however, the best chance to do so will be with AAPL, arguably the most important stock-market bellwether of them all, torqued for a rebound. If conditions look favorable before the opening bell on Wednesday, we'll look at expiring, near-the-money calls for a potential leveraged play. Stay tuned to the chat room if you want to stay on top of this opportunity, especially if you've never made money trading options.

We risked small change ($60) buying the expiring 190/195 calls spread 20 times for 0.03, but it is no longer even a longshot bet. Instead of reversing sharply and pulling the broad averages with it, the stock has continued lower, putting considerable drag on the market. The even worse news is that Wednesday's decisive breach of the 161.60 midpoint support shown in the chart implies that more downside to 150.63 is likely. Even so, I am not recommending a mechanical short if the stock rebounds to the green line, since the C-D leg of the bearish pattern has developed so slowly. _______ UPDATE (Dec 23, 5:10 p.m. ET): The stock dove nearly $7 on Friday, slightly exceeding the 150.63 target before coming to rest pennies above it. I'd be surprised if AAPL fails to bounce from here, but we should be prepared for this nonetheless. Mr. Market denied us the opportunity to bottom-fish that we'd patiently waited for, but the risk of staking out a long position at Friday's closing bell, especially against such an onslaught as we'd witnessed, was unacceptable. If you did so anyway, please let me know in the chat room so that I can determine whether to establish a tracking position._______ UPDATE (Dec 24, 10:16 a.m.): AAPL obliterated the 150.63 support, so it's going even lower. Here's a new target at 145.66 that differs slightly from the 144.82 target given in The Morning Line. It should work nicely for tightly stopped bottom-fishing, but be prepared for Mr Market, the sonofabitch, to touch it a few nanoseconds before the closing bell. Be careful using options. The Dec 28s are extremely pricey, with 'implieds' nearly twice historical stock volatility and shedding time premium by the minute._______ UPDATE (Dec 26, 3:35 p.m.):  AAPL has uncorked a spectacular rally today

The relentless plunge of the World's Second Most Valuable Company continued on Friday, making it all but impossible for the broad averages to rebound intraday or even in the final hour. AAPL now looks like a good bet to fall to at least 161.97, a midpoint Hidden Pivot support shown in the chart (inset), or possibly to 160.23, an alternative target given here earlier. If, heaven forbid, the stock closes beneath the lower number for two consecutive days, look for more downside to as low as D=151.36. That would equate to a 35% fall from the all-time high of 233.47 achieved in early October. We hold a longshot bet, the Dec 28 190/195 vertical call spread, purchased 20 times for 0.03 apiece. Total risk is $60 plus commissions, but the position has the potential to produce a profit of as much as $9940 if the stock reverses with a vengeance before year's end. _______ UPDATE (Dec 17, 9:56 p.m. ET):  You can bottom-fish the 161.96 target shown here with a very tight stop-loss, but please note that using the night-session bars yields an alternative target at 161.60. A decisive breach of this midpoint Hidden Pivot support would be very bearish, opening a path to as low as D=150.63 or alternatively (as noted above) 151.36._______ UPDATE (Dec 18, 8:55 p.m.): No change in my outlook or advice unless AAPL should exceed 172.57, the point 'C' high of the pattern shown in my last update.

Although we are technically justified in using the 1415.62 Hidden Pivot shown as a minimum downside target, it would seem that bulls are not about to go quietly into the night.  The pattern shown does not warrant a 'mechanical' short if the stock should rally to the green line, since the downtrending B-C leg did not fall quite far enough. Actually, I'd be tempted to buy a pop at 1688.62, given that the turn would have come almost precisely from a midpoint pivot. That is usually a sign that the countertrend is just that -- i.e., corrective.  We'll cheer from the sidelines for now, but the 1415.62 target will obtain until such time as 1779.62 is exceeded to the upside. _______ UPDATE (Dec 12, 9:44): We'll continue to observe -- unless tedium does us in first. Although that'd be unusual for this wacko-powered stock, it has achieved no net gain over the last two weeks. _______ UPDATE (Dec 14, 11:41 p.m.): AMZN dipped below the 1597.83 midpoint Hidden Pivot support for the second time this week, probably by enough to make more slippage to at least p2=1506.83 likely. You can bottom-fish there if you've been short for at least a portion of the ride south._______ UPDATE (Dec 17, 10:06 p.m.): The stock bounced from 1505.01, a hair beneath the minimum downside target given above. However, the rally would need to hit 1620.41 -- the sooner, the better -- to hint it's capable of getting legs. That's a tick above a minuscule 'external' peak discernible on the 15-minute chart. Alternatively, a close below 1506.83 would grease the skids to as low as 1415.83, a Hidden Pivot target that I posted in the chat room today. _______ UPDATE (Dec 19, 9:33 p.m.): With today's brutal reversal, the 1415.83 target looks like it

AAPL's manic bounce came from a technically awkward place that makes the rally suspect. The stock should have fallen at least to the 161.14 target shown, or to an alternative target given here earlier at 160.23, before turning around. The actual low occurred at 163.33, implying that sellers have more work to do. I wouldn't recommend getting too aggressively in the way of this rally in the meantime, even if it seems likely to turn out to be a fake.  It projects most immediately to 172.67, assuming it can get past a midpoint Hidden Pivot resistance at 170.24. I'll recommend a modest speculation in case I'm wrong: Bid 0.04 for 20 Dec 28 195-200 call spreads, taking 0.01 of discretion. I will adjust the price once I've determined how the spread actually trades, so stay tuned for updates here and in the chat room._______ UPDATE (Dec 11, 5:32 p.m. ET): We settled on a 0.03 bid as the session worn on. Leave it in (or re-enter it) on Wednesday as long as the stock is trading 167.50 or higher._______ UPDATE (Dec 12, 9:50 p.m.):  Several subscribers reported filling the order, so I've established a tracking position consisting of 20 Dec 28 195/200 call spreads for 0.03. Our total risk is $60 plus commissions, and we are shooting for a payoff of at least 10-to-1. It is a longshot bet, so keep your expectations low. For now, offer 10 of the calls to close, g-t-c-, for 0.06. It would take a rally to around $177 this week to get us filled.

Our #1 stock-market bellwether could fall a further 9.6% if support at p=172.47 doesn't hold. That is my minimum downside target for now, although I expect a tradeable bounce even if the stock eventually goes lower.  A decisive breach of p would send the stock down to as low as 160.11, presumably dragging the entire stock market with it. We should also remain open-minded to the possibility of a turn from p2=166.29, since that's where just about everything has been reversing, even uptrends. Most bearish scenario of all: a two-day close beneath D=159.75. _______ UPDATE (Dec 6, 5:40 p.m. ET): The stock bounced from an obvious place, triggering a 'counterintuitive' buy signal that I'd drum-rolled earlier in the chat room. The move has immediate potential to at least p=177.76, but anything higher would put a 185.10 target in play. _______ UPDATE (Dec 7, 3:23  p.m.): 160.23, here we come!!! Click here for the chart. The stock will have a chance on the way down to bounce from 166.41, a secondary pivot that can be found on the 15-minute chart, where A=194.48 on 11/16. It is my minimum downside target for Monday. Alternatively, a push above 178.29 would turn the lesser charts impulsively bullish.