It seems like LONGS are all pumped up today, and I am already seeing some “$600 in 2 weeks” calls…That’s fine if you are already in the stock and have a little longer term perspective…
However, Do NOT chase this pop…around $492, stock might had been a less risky entry for LONGS, but now at $525, trust me the SHORTS are going to come in…
All I can say is remember the first Icahn tweet on Aug. 13th…big purchase was made days before the tweet…then people chased the rally…stock popped and then it dropped below the entry level…
Now this is no different…Apple has already bought the stock…yes they might buy more but today’s pop didn’t change the sentiment…
In Jan. 2013 the stock dropped and retraced 61.8% of the earnings drop. (Some people will consider this the gap fill)…then stock headed lower…
Now this year the 61.8% retracement of the drop is $531 level and 50% retracement level is $524.
Add to that, 61.8% retracement of the Dec. 24th to Jan.31 down move is $532 and 50% retracement level is $523
So the conclusion is $523-524 and $531-532 levels going to act as resistance, and that’s where the shorts will come in.
If you look at this chart (stockschart.BlogspotDOTcom), you will see the new downtrend channel. The midpoint of the channel (Around $524 level) will act as a resistance too. So most probably stock might reverse this up move and start a new down leg at $523-524 level (if not might reverse at $531-532)…So do not ENTER after the opening pop today.
Technically the reasons to be bearish on AAPL:
1. The uptrend line is broken
2. Not only the stock is below 50 DMA, but also since the last uptrend started, the 50 DMA for the first time is sloping down from up
3. Not the new money, but the buybacks are the one trying to provide the support for the stock
Good luck with your investments/trades
Yes my initial expectation was wrong, and I updated that 2 days ago in the post below. Also I am ok with being wrong since I am not like most of the people here who thinks they are bigger than the market. I was updating my thesis, and I was saying the Apple wasn't showing any topping signs yet.
Now on the record I will say I just shorted the stock with some March $545/515 Bear Put spread using 2% of my trading account. If i was wrong I will get stopped out and I will update that too.
One more thing, I am not bashing Apple, the company, I was just commenting on the price action of the stock.
GL with your investments.
Looking at your post history I can clearly see you are already in the stock and being emotional for whatever the reason. So I can understand why you have to react to my post this way.
Good luck with your investments.
I, too, believe that the rules of technical analysis have been tampered with so much that their application is limited. Given the Fed, the debt, the recent change in demeanor from Cook, Yellen, Europe, and the mass insanity that is the retail investor, the algorithms, the machines and you can see why the rules have changed. Over time it may all return but over time, of course..........well, you get the idea.
I agree with your opinion only to a limited extend. Technical analysis is a broad area and some parts may not work in this complex market environment. For example simple analysis based on RSI and MACD won’t give you clear signals because of the factors you mentioned above. RSI can be in overbought territory for a long time if the new money (let’s say easy money from Fed) is coming in to a stock. So shorting that stock just because it is overbought would result in a failed trade. On the other hand the same argument can be made for fundamental analysis. An undervalued stock can sell off even more. And the investors will be scratching their heads wondering P/E matters anymore or not.
My technical analysis is mainly based on price/volume action rather than the indicators which are derivatives of the price/volume action. Doesn’t matter an investment firm buys AAPL or Apple buys its own shares it will show someone is buying, and that’s all I need to know first. Eventually you will get the second part of the story to know who bought the stock. By that time your thesis will be confirmed to stay in the trade or to get out.
From my experience, what I realized is that really short term trades are too complicated now since no one can compete with algo’s. Longer term investments are safe but you will miss out on the opportunities presented during momentum runs. That’s why I am in intermediate term (in a trader’s perspective) where you have can take advantage of lower risk/higher reward situation.
The important lesson here is if you depend on technical analysis alone you will be screwed in this new market environment. (Same goes for the fundamental analysis, for example it was evident with people like Cramer who mostly ignores the technical analysis, and always gets the timing wrong. Even thou I admire him for his knowledge of the companies and sectors)
nice .. but I think you are going to have throw the book out the window this week and next... Apple is in the stock now.. they are actively supporting it... Cook said as much... prior to earnings I believe Apple was content to let market forces control the stock... they had a planned buy back... they did not want to be heavy handed in the market and leave foot prints that would cost them money. They wanted as many shares as possible for the cheapest price. They did not care if the stock went down.. the sat on their hands as the stock fell, figuring the lower it went the better for the buy back... once the stock tanked after earnings they were a little upset, shocked and maybe felt disrespected.... that's why Cook went gangster on Wall Street... he never says anything... but for him... he said a ton.. Wall Street doesn't want to price our stock appropriately then we'll do it for them... see a few of my posts on here today.... there is palpable support for this stock over the past few days... that we have not seen in awhile..... the chart stuff will not work with a determined Apple in the picture.. after the stock gets back to 550-560 I believe Apple backs off..... the options market is telling you which way the stock is going to go... the calls usually deteriorate rapidly mid to the end of the week.... this week the in the money and just out of the money calls will hold strong.. 535, 540, 545, 547.50 calls will all make money this week...
First of all, good to hear your opinion on my thesis.
Today's price action is the first time AAPL is showing topping signs...From people on this board to Cramer to analysts are getting bullish again after the earnings let down. This higher price level (compare to low made after earnings), and the bullish sentiment is the ideal opportunity for contrarions to short the stock.... I am one of them, and I believe AAPL will see $515 before it can reach $560.
Update on my thesis:
Price went through the FIB resistance levels easily, and didn’t reverse the way I expected. AAPL is not showing any topping sign yet to signal shorting the stock. Sellers are not willing to step in at these levels. I think sellers are not going to come in during this aggressive buyback by the company, thus price might have more room to move up. Since price is already above the midpoint of the down trend channel, now it might test the upper channel (down trend line)
However, I am NOT considering the uptrend has resumed yet. As mentioned on the updated chart (stockschart.BlogspotDOTcom), price need to break the down trend line from below, and cross the last FIB retracement level of $541.69-541.96 to resume the uptrend.
Also generally when a trend line is broken, price might retest the trend line before resuming in the direction of break. The last up trend line was broken after the earnings and price is about to re-test the line from below. So again, there is another catalyst for the price to reserve.
P.S.: I incorrectly mentioned above that “61.8% retracement of the Dec. 24th to Jan.31 down move is $532 and 50% retracement level is $523”. Actually the 38.2% level is $523, 50532, and 61.8% is $541.96
very good post yasi. you are very good w technical. also apple has 2 gap to fill, one above and now one below. will most likely fill one below first. not sure if bounce from there. may continue down. I still think stock wants to test 200. not sure how long cook can prop up price. shareholder meeting come soon. price always fall after.
I'm not here to disagree with your TA, but aapl closed above its 400DMA and it's been having a tough time with that. I'd say that's a good sign to say the least. With the Icahn move aapl was struggling with its 200DMA. So what I'm looking at now is the momentum levels of the 400 days cumulative. When that indicator troughs, I'd say it's safe for aapl to go higher. It's wait and see now.
Longs should be pumped. 1) Cook finally spoke up 2) he did more than speak up, he paid up big time 3) obviously he is going to pay up even more and announce a bigger buy back 4) the next two QTRs are easy for aapl to beat given the increased buy back and they introduced no products during that time last year 5) Cook FINALLY did something on a Friday....
Even thou my opinion is purely technical I will respond to the issues you brought up:
1. Why did Cook speak up now? I will give you my take. Icahn twisted Cook's hand on the day Apple got hammered by buying more stocks and tweeting about it. What cook did now is primarily just to respond to Icahn, and to prop up the price until the shareholders' meeting so the atmosphere will be favorable to him and the board.
2. He paid up only the funds that was already allocated. Acceleration shows desperation or is something new going to come out of Apple?
3. He is going to announce bigger buyback? Isn't that Icahn wanted and the board rejected...what gives you the idea they are going to increase the buyback?
4. "next two QTRs are easy for aapl to beat"...isn't that what they say about the "best ever quarter", the holiday quarter
5. "Cook FINALLY did something on a Friday"...yes its an anomaly...again whats the reason?