In my opinion your thesis based just on one indicator, and just 2 previous reference points is weak. Trading by looking at just one indicator in a vacuum is very risky. For example you ignored the Apple’s price action leading up to those low volatility areas. Both times AAPL was making all-time highs. Also not only it was outperforming the market, but it was also a market leader at those times. Now the company and the stock are in a different category.
I agree with you that a decent move is coming in a week’s time, however I think AAPL is at an inflection point now where we will know soon whether the correction taking place during the last 3 months is over or not. If AAPL broke above the down trendline and $552-$557 level, I would be a buyer for a quick trade, but for now I believe the correction might continue.
Good luck with your position.
$12 increase on a $26 stock is equal to 31% return? Really? lol
It is a shame that people like you try to put down other people when they make a mistake. It might be too late for you to learn math, but it is never too late to grow up.
I agree with you...the stock showed real strength during the recent rally...rallied more than I thought...I bought some March Put spreads last Thursday thinking pullback will start on Friday. but it didn't. Today's price action was encouraging for the bears. Hope the stock won't overshoot one more time to stop me out of the trade.
GL with your 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 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)
Yes I noticed that too...some people believe the correction completed the 4th wave and 5th wave up is coming. However with the broken trend line, I don't see the 5th wave going much higher. We will see.
AAPL is now testing the last FIB resistance I mentioned above...We will see how the price reacts now.
Leveraged ETFs are better than options if you are not comfortable trading options. As long as you have proper targets & stops (risk/reward) it shouldn't be a huge problem. I am now moving towards ETFs primarily since I had some good success with leveraged index/vix ETFs, as well as the sector ETFs.
I hear what you are saying, however I trade off the price/vol action mostly than the indicators...If price moved higher than the current level it will test the old high and break out...so then it would be a easy trade on the long side.
Yes Darla, it seems like the first leg down (A wave) was followed by this recent rally (B wave), and the C wave down is about to start to complete the correction.
Even the long term bulls are expecting a deeper correction.
Next 2 days will conform that since today is basically a flat market.
Are you trading SPY?
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
You can't buyback without allocating the funds first and filing with SEC. May be you misunderstood the details...12 billion was through Accelerated Share Repurchase (ASR) , which is basically buying the shares from an investment bank. The other 2 billion if on the open market. The whole 14 billions was part of previously allocated funds.
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?
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
Go to Chicago Board Options Exchange (CBOE) website and look under tools. I have premium service subscription but you can access the IV history for free.