Phil and all,
This is going to be a long post, so I apologize in advance.
Below please find two links. They will be referred to often in this post. One may wish to download and print the links while they read (Sorry, I am not trying to sound pedantic; I just feel they are essential to following the forthcoming four bits worth). (BTW, some of my links recently have not appeared in blue, and thus must be copied and posted to a browser to get the data. I hope this doesn't happen this time).
chart4.bigcharts.com
206.7.107.50
The first link is a monthly chart (excluding today's data) from Big Charts.com showing Price by Volume over Volume.
The second link is a listing of available options with today's action, which is probably not reflected in the open interest.
Phil,
First, I am worried about the overall market. It is probably due for a correction, but I think there is enough money coming in to keep it going for a few more weeks. I would not be surprised to see DOW 9,500 before we get creamed, but I do not expect to see DOW 10,000. Sooner or later, this market will correct big time, and I hope I am not in it too much when it does.
I do not usually place much importance on monthly charts. However, I believe the Apple 5-year monthly chart provides some interesting information for the short-term. I think that it is showing a developing reversal rectangle/bottom Head and Shoulders (with a double head formation), or something akin to this. At any rate, the top line or neck line seems to be around 28-30. If earnings expectations continue to rise over the next two weeks, and IF earnings do prove to be positive and better than expectations, then we shall likely break out of the 28-30 area big time.
Unlike you, Phil (not a criticism, just an argument position), I don't see the 29 3/4 area as a significant resistance point, just a chart formation point. I think the true resistance is more in the 36 to 38 area, akin to the very large price by volume point at that level. Admittedly, the relevance of this point will disappear over time (and five years is a long time), but the upside resistance back through the mid-50's is so scant, that I think this is the next point of significant selling. (We are working through the MacWorld spike right now, and should, IMHO, not be a significant factor if we breakout). My expectation is that we will break out of this area and pop to about 35 over the next 2 to 8 weeks (with continuing positive news and no market tank). Subsequently, we will come back to the 28 to 30 area as a pull back to the monthly formation line/neck line over the next several months. (This area also seems to be developing as a significant support range). If, as we all hope, Apple really does have it's act together and the earnings really take off, then over the next 2 years, we may very well test the old high around 70. (This is a VERY BIG IF, but should not be a factor for the next few weeks).
Responding to your comment about options (see the second link), I don't really think the January 99 options will be a significant factor, since they are not expiring soon. More likely, and this is a potential negative, the large Apr 22.5 and Apr 25 options open interest positions are the significant factor for the next two weeks. (I doubt the similar relatively large put positions are of much concern right now since they are out of the money). The Apr 30 call open interest is basically non-existent right now. I would expect that the market specialists have already gotten rid of any inventory of the Apr 22.5 and 25 positions, so hopefully they will not try to back track on the stock near term.
In summary, I am probably overly bullish, and I do not think my April Call positions will see all of the upside that can occur with very positive news. Nevertheless, this is what the charts seem to be showing to me, and I hope that I am right. If I am right, then there is probably good covered call potential for the long stock positions (perhaps the Jul or Oct 98 call positions, purchased after the coming pop) before the stock starts to accelerate with the coming good news toward the end of the year.
I welcome any comments from any posters, even you Andon, who seems to play the stock market as if it was an historical dart game. This is certainly not set in stone, and I am quite willing to modify my evaluation based on meaningful technical and or fundamental evidence.
Sam |
