Apple seems to be going to bounce off the long term resistance line again.
Hello High Grader,
I'm looking forward to your Elliott Wave update.
I think Apple has already broken up and out of its longterm trendline.
bigcharts.com
Looking at the All data monthly with Volume and Bollinger Bands, one can see that in this past July and August the stock went through a line drawn through the Jan 92 and July 95 peaks. Since the break out, the stock has been churning above the trendline (basically your entire Wave 4 pattern). It's almost as if it has formed a flag or a flat on the monthly chart. The 6-month daily chart with RSI and Bollinger Bands shows this same pattern more like a falling wedge or consolidation symmetrical triangle (or your extended and irregular Reverse Head and Shoulders pattern).
bigcharts.com
The chart also shows that Apple has just broken up and out strongly from this daily formation, breaking the trendline from the August high with back-to-back breakaway gaps. I had anticipated a pullback at least to the 2nd gap, but the move seems so powerful, I now don't think it will happen. Andrew in his later post pegged this one.
Today was the day for the pullback. Tomorrow and Thursday are getting too close to MWSF for comfort with a short position in this stock. I'm out of that position smarting a little. It may whipsaw down a bit in here, but the hype will quickly take effect and may shoot it to a test or breakthru of the August high. Measuring the breakaway gaps suggest a minimum target of around 45 very short term.
This stock and the Nasdaq are riding the top Bollinger Bands, with Apple especially strong above them. They can both do this for awhile, but I'm still worried about the Max Pain point and the need to correct from the upswing. This could come after MWSF with a lot of volatility between now and Superbowl. Things that Steve says or shows next Tuesday may strongly affect the stock, so who knows what next Wednesday will bring.
Nevertheless, the analysts are waking up to Apple's earning's potential. The ability for Apple to come in with stellar earnings compared to their increasingly robust forecasts becomes more difficult. Also add to that a product changeover with some factory downtime. The earnings are likely to be great yet still not blow away the forecasts. If this happens a little on the bottom side of the whisper number, Apple could very well test the longterm trendline (especially if the market correct at the same time) with lows in the Middle 30's, fulfilling in part the MaxPain Point theory.
Regarding the theory, I think that January options writers play more by hedge rules and without pain. Consequently, one should probably throw out some portion of the Jan options that were leaps. This would probably raise the MaxPain Point more towards 35. Just a thought.
Sorry for the long post.
Good luck,
Sam |
