Apr 112014

Just to elaborate on my previous market comments, any bounce that may or may not materialize around the current support level on the Nasdaq 100 is expected to be a counter-trend rally in what I still believe to be the early stages of a much larger downtrend. Today the $NDX hit the first of four downside profit targets that have been listed on the $NDX live daily chart for some time now. My expectation at this time, which could change depending on how the charts play out going forward, is that before all is said & done, the $NDX will have fallen to my 4th & final (at this time) target which comes in around the 3150 level or the primary uptrend line on that chart, whichever comes first. That could take as long as several months or a short as several days, should the nearby support levels give way quickly.

With that being said, in order to most effectively utilize the trade ideas on RSOTC one must align the entries & exits of those trades with their own unique trading style and typical time frame. For example, very active, short-term traders like myself might opt to micro-manage a swing trade listing multiple price targets by booking profits as the earlier targets are hit (assuming the short-term charts confirm that a bounce is likely) while re-entering the position on the bounce with the intention of swinging the trade down to the final target(s). A less active, longer-term swing or trend trade might opt to ride out any short-term counter-trend bounces in the position with the intent of holding out for the 3rd or 4th target.

The bottom line is that trying to time all the minor swings in the market is not always easy and typically something best attempted by more seasoned traders. Those traders or investors that are longer-term bullish at this time should focus on initiating or adding to positions on pullbacks to support or breakouts of bullish chart patterns. For example, I’ve recently highlighted how well the 40-week EMA has defined major bull and bear trends in AAPL (Apple Inc.). After breaking down from the recently highlighted symmetrical triangle pattern on the daily chart, AAPL has now fallen to the 40-week EMA (which is the same as the 200 EMA on the daily chart), thereby offering an objective long entry, again for those who believe that the current correction has most likely run it’s course.  Those with a longer-term bearish view could wait for a solid weekly close or two below the 40-week EMA in order to establish a swing short position on the stock.

AAPL weekly April 11th

AAPL weekly April 11th

Again, we may or may not get a tradable bounce in the $NDX from this current support level and as such, I plan to update some of the trade ideas that still offer an objective entry for those looking to add any long or short exposure at this time. As I might be updating a number of trade ideas today, email notification may not be sent out on each update so best to check the site throughout the day or over the weekend if looking for any trade ideas at this time. On a final note, for the most part, I try to avoid establishing any new positions on a Friday, especially towards the end of the day due to the extra overnight risk associated with weekends. Based on all the volatility lately, chances are that the market is going to gap one way or the other on Monday and that gap could be sizable.

Apr 042014

AAPL (Apple Inc) is currently trading well below the symmetrical triangle. First downside target would be the 200ema/515.60 area.  click here to view the live daily chart of AAPL

AAPL daily April 4th

AAPL daily April 4th

Also keep in mind that the 200-day EMA, which is the same as the 40-week EMA, has done an excellent job of defining major bull & bear trends in APPL in recent years as evidenced on this 10-year weekly chart. click here to view the live weekly chart of AAPL

AAPL weekly April 4th

AAPL weekly April 4th


Apr 032014

I’ll be watching AAPL (Apple Inc.) closely over the next few trading sessions as the price of this market leading stock is quickly closing in on the apex of this symmetrical triangle pattern. The downtrend line of that pattern is generated off of the Dec 5th peak in AAPL which came just two trading sessions before the AAPL Looking Increasingly Bearish  post in which a detailed case was made for a correction in Apple. From that Dec 5th peak, AAPL fell about 13% (same percentage drop as the previous overbought cluster that was highlighted in that post).

AAPL daily April 3rd

AAPL daily April 3rd

Since the Dec 5th peak, AAPL has been trading in a contracting price range, i.e.- a symmetrical triangle pattern. Such patterns often prove to be continuation patterns with the stock breaking out in the direction of the previous trend. However, triangle patterns can break either way and it’s also not uncommon to see an initial “fake-out”, with prices breaking in one direction only to reverse and continue moving in the opposite direction shortly thereafter. Personally I have no interest in taking a position in AAPL regardless of which way prices move from here but as the world’s largest publicly traded company & the largest weighted component of both the S&P 500 and Nasdaq 100 Indices, it would be prudent to keep eye on the stock over the next few weeks.

Jan 302014

The SPY/$SPX continues to consolidate above the T1 support zone and will likely move lower over the next few trading sessions.  Any break below yesterday’s low (which was right around the 38.2% fib retracement level) should open the door for a quick move down to the T2 area or lower.  However, as I like to say: Support is support until broken.  Therefore, shorting or adding to short exposure around current levels would not be objective.  Best to wait for a break below yesterday’s low IMO, which is less than 1% below current level.  Those who are near-term+ bullish could certainly take a shot at adding long exposure on or slightly above the T1 level with stops just slightly below yesterday’s lows but again, the most bullish of my current scenarios (my alternative scenario) remains a possible move higher (which could last several days to a couple of weeks) to backtest the recently broken uptrend line on the $SPX daily chart with prices turning down from there.  My preferred scenario remains a continuation of the short-term downtrend to resume shortly with the SPY heading towards the 175 area.

As previous highlighted, both AAPL & XOM recently failed on their attempt to regain the former support, which became resistance once broken.  Since the backtest of their respective broken support, now resistance levels, both have turned lower as expected with XOM already hitting my next downside target immediately following the open today (and as expected, has bounced since).  I will continue to monitor the charts of XOM & AAPL closely as they are the two largest components of the S&P 500 as well as the two largest companies in the world (as measured by market cap).  As such, XOM & AAPL are likely to act like a ball & chain hitched to the broad market if they continue to underperform.

Jan 282014
Jan 232014

The SPY/$SPX is now trading well below the uptrend line shown on the previous 2 hour charts.  This breakdown increases the chances for a move down to the T1 & T2 target areas (177-177.50 & 174.65-175).  Assuming that T2 is hit, this would correlate to roughly another 500 point drop in the $DJIA, in addition to today’s 180 point drop.

Jan 222014

As a follow-up to Friday’s expectation for a 5% pullback in the broad markets, so far XOM is nearly half way to it’s expected 4% drop while AAPL and the SPY are currently trading slightly above the levels posted on Friday.  Previous & updated 120 minute charts on XOM, AAPL, & SPY below along with the AAPL daily chart.  Interesting how the broad market (both the $SPX & $NDX) have continued to power to new highs while AAPL peaked back in early December and has been in a confirmed downtrend (as defined by a series of lower highs and lower lows) since.  The updated 120 minute chart of AAPL discusses two alternative bearish scenarios as well as a bullish scenario (new near-term highs, which would call the near-term downtrend into question).

Jan 172014

OK, a bit of a bold call & maybe a bit simplistic but based on my read of the world’s two largest publicly traded companies (and two largest components of the S&P 500 Index), XOM & AAPL, I would say that the odds for a 5% drop on the broad market (S&P 500) over the next week or so are pretty good.  Calling this market down over the last year or so has been a fool’s errand (being one of those fools, I should know) but the charts are the charts and although my efforts have been focused on individual stocks and sectors lately (vs. broad market analysis), I figured that it was worth sharing these 2-hour charts and my thoughts on XOM & AAPL.

Again, maybe an overly simplistic view but the way I see it is that AAPL is poised to drop about 6% following the recent breakdown & near-backtest of this uptrend line while XOM is set to drop about 4% following its recent uptrend line breakdown & today’s backtest.  Other factors go into my analysis such as the significant negative divergences preceding the recent trendline breaks on both XOM & AAPL as well as the $SPX (as shown via the SPY 2-hour chart below).  With the abbreviated trading week due to the US holiday on Monday, it might take until the following week for these downside targets to be hit, assuming that my analysis is correct, but remember that stocks typically fall faster than the rise so just make sure to have your stops in place (on longs) or your favorite short setups ready to go if the selling does start to kick in next week.

Jan 092014

On December 1oth, a bearish case was laid out for AAPL (Apple Inc) in the AAPL Looking Increasingly Bearish post.  Since that post nearly one month ago today, AAPL did indeed sell-off and then bounced but failed to exceed the early December highs.  Among the bearish arguments for the stock at that time were:

  • A failure on the recent attempt to take out the December 3, 2012 high (which it has yet to do).
  • Reversal at the 61.8% Fibonacci retracement of it’s Sept 2012- April 2013 bear market which nearly cut the stock in half.
  • Significant divergences in place with prices making higher highs while most indicators and oscillators were making lower highs.
  • Chaikin Money Flows about to turn negative (and have since done so & the CMF remains solidly in negative territory).
  • Extreme overbought reading clusters which have historically lead to corrections in the stock (and so far, have once again).

That previous discussion on AAPL was posted while the stock was mere basis points from it’s 52-week high and while prices were at the top of a bullish falling wedge pattern.  Since then, prices have moved lower and as this updated AAPL daily chart below illustrates, AAPL has broken below the bottom of the falling wedge as well as the alternative (dashed) uptrend line which was added to the AAPL live chart shortly after that previous post.  With the broad market still solidly entrenched in an uptrend (all trend indicators remain bullish at this time), I still don’t have an interest in shorting AAPL.  However, with AAPL continually leap-frogging with XOM for the title as the world’s largest publicly traded company (and a stock most likely owned either directly or indirectly by anyone reading this), it is worth pointing out that AAPL may have only just begun it’s decent.

AAPL daily Jan 9th

The following chart shows the AVSPY (AAPL vs. SPY ratio) chart with the AAPL stock price plotted in the upper-most window.  As this chart illustrates, breaks above/below the primary trendlines in the AAPL/SPY ratio have come very early in the last couple of primary trend reversal in the stock.  Maybe this time will be different, maybe not.  Just something to keep an eye on for now, especially with that most recent uptrend line break in the stock.

AAPL vs SPY ratio chart

AAPL vs. SPY ratio, Jan 9th

Dec 102013

Most, if not all of the charts on the Live Chart Links page are up to date including this AAPL (Apple Inc) daily chart.  Thursday (Dec 5th) was an interesting trading day for AAPL.  The stock just managed to break out to a new 52-week high as it took out the Dec 4th, 2012 high, but still fell shy of the Dec 3rd, 2012 high… interesting time symmetry. What I also find interesting is that AAPL was stopped cold at the 61.8% Fibonacci retracement of it’s previous bear market (when using prices adjusted for dividends).  The 61.8% retracement level when using the unadjusted stock price lies about another 8 points or 1.4% above Thursday’s highs, another potential resistance level to watch should AAPL make another thrust higher.

AAPL daily 5

Essentially, prices have been wedging higher while most indicators and oscillators diverge over the last several months.  Since those bearish divergences began forming in mid-late August, AAPL has registered two separate clusters of overbought or very near overbought readings on the RSI (see red arrows on chart for the history of price action following such readings).  The previous cluster of overbought readings which came with the second lower reading on Sept 9 was immediately followed by a 13% plunge in the stock.  The second and most recent overbought cluster has just occurred with the sell “trigger” coming on Friday’s RSI cross back below the 70 level.  Finally, keep an eye on the CMF (Chaikin Money Flow) which I’ve added to the top of the chart.  Historically, the CMF has cross from positive to negative territory in the very early stages of significant corrections in Apple.  Barring an immediate and sustained move higher in the stock, the CMF will likely move solidly into negative territory over the next several trading sessions.