The Price Pattern in APPL

Back in August 2013 when Apple stock (AAPL) was trading near $70, I wrote an article that discussed the current trend in the stock and its recent breakout out of the basing formation below $65. You can view this article, if you want to, again here:

http://www.trendrecognition.com/education/articles/220-apple-has-traded-in-opposite-direction-vs-sap500

Just pay attention, that the stock is now trading at a split adjusted level.

Now, what can we say at this moment? As I see it the basing pattern that I discussed with you almost an year ago, has played out well. Here’s the updated chart of APPL:

As you can see, the stock has moved nicely. Even the negative earnings news caused only temporary setbacks. The most recent breakout was in late April of this year when the stock gapped up after a positive earnings news and thus made a breakaway gap on its daily chart.

Now, the trend remains positive and thus one can favor the upside. However, right now it is more difficult to find a low risk entry point in the stock unless you are a very short-term swing trader. Based on your way of making investment decisions, you may decide to invest or not. But from a money management perspective, it is always better to get involved in stocks after they breakout, not after they are extended.

What do you think of this analysis and what’s your opinion of the AAPL’s chart? Please, post your opinion below. I’ll be glad to see what you think.

Trade with the Trend!

Alexander
http://www.Trendrecognition.com

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading.

Year-End Rally?

As most of you know, historically December is a positive month for stock market. And based on our wave interpretation in S&P500, we also expect to see a rise into the end of this year and possibly a trend reversal in the very beginning of next year. Here’s my wave interpretation again on weekly chart of S&P500:

http://www.trendrecognition.com/images/stories/2012/indexes2012/sp500_mt_20121201.gif

Zooming into the shorter-term picture, wave (Z) is taking the form of a Triangle and is likely to top out in the 1455/75 area:

http://www.trendrecognition.com/images/stories/2012/indexes2012/sp500_st_20121209.gif

Now, the market may not follow this wave structure, but so far it has moved in line with my previous expectaions. So, I have no reason to alter my view. The recent weakness in Nasdaq 100 and Apple in particular is a strong evidence that supports the larger-degree bearish case.

So, if there is an year-end rally, enjoy it, because it may not last for long. As you know from our weekly updates, we try to play this expected upmove on the daily chart. But the big trade for next year is likely to be on the downside. A move below the November low at any time in my opinion will signal the end of the entire rally from the March 2009 low! Plus, the 1st year of the presidential cycle is most of the time a negative year for the stock market. So, we need to be prepared.

And if you haven’t seen my video that shows the 3 secrects to quickly identifying the market trend, go to the home page of www.trendrecognition.com  and get it.

Trade with the Trend!

Alexander
Trendrecognition.com

P.S. Do you want more stuff from us – go here to subscribe for my weekly newsletter

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.

 

Nasdaq 100 and USD/JPY

Today I want to talk about two markets: U.S. stock market (and mainly for Nasdaq 100) and USD/JPY forex market.

As a reader of my web site you know that I turned bearish on Nasdaq 100 in early October at 2797 in my weekly outlook (the analysis that I provide each weekend). In addition to the negative technical picture back then I pointed out the lagging performance of previous leading stocks like Apple. As you know both Nasdaq 100 and Apple have declined sharply since then. Apple is now below its 200-day moving average in a clearly defined downtrend on its daily chart. Nasdaq 100 on its turn, shows a clear picture of lower lows and lower highs on its daily chart:

http://www.trendrecognition.com/images/stories/2012/indexes2012/nasdaq_st_20121104.gif

While I still cannot confirm a trend reversal on the weekly chart (a move below the July 2012 low in semiconductor group will be required for that), the recent price action has justified my bearish opinion from a month ago. Now, with this negative pattern I expect more losses as long as the prices hold below last Friday’s top at 2701. And it should be noted that a move above 2701 will not turn the daily chart positive, but will only make the Short-Term picture more neutral.

The other very interesting market right now is one that has been dead for a long time: USD/JPY. As you know this market bottommed out in late 2011 and it has been in wide range since then. At times the trading was extremely boring as this pair traded within 50 points for several days in a row.
Three weeks ago I turned bullish when the pair broke above the 79.25 chart resistance. Now, it is important to see a firm breakout above the 80.60 level. And then comes the 84.00 level which seperates the bearish from the bullish outlook on the weekly chart now. With the current downtrend on U.S. stock market, it will not be a surprise to see a strength in U.S. dollar against major currencies, including JPY.

Elsewhere, gold remains in broad sideways consolidation between 1520 and 1800 on its daily chart. It failed near 1800 a few weeks ago, so most likely it is now heading lower toward the lower limit of this range.

Trade With The Trend!

Alexander
Trendrecognition.com

P.S. Do you want more stuff from us – go here to subscribe for my weekly newsletter

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.

 

 

More Serious Correction in U.S. Stock Market

Two weeks ago I discussed with you the possibility that the U.S. stock market might have topped out . Since then we have seen further evidence signalling that at least a more serious downside correction or consolidation has started. Now the question is, how deep this correction may be and when it will be time to buy.

First and foremost, I think that one should follow the trend no matter what. Sometimes that’s not easy though because the trend may be higher on the daily and weekly chart (as one can see now on Nasdaq 100 charts), but it may be down on hourly chart (as it is right now on Nasdaq 100: just take a look at this hourly chart: will you ever go against such strong trend?:)

http://www.trendrecognition.com/images/stories/2012/indexes2012/nq100_vst_20121015.gif

Now back to our main questions – where the market can find a bottom. I think several things should be observed when trying to find the answer:

1.) emerging markets: right now emerging markets ETFs have started to underperform the U.S. stock market agian. Should a bottom is made, they should turn up first in my opinion.

2.) the behaviour of VIX is very important. Should it climb above 17.0 or 18.00 level, that will be quite a negative signal, suggesting much more downside.

3.) leading stocks like AAPL should find support and turn up either first or together with the general market.

4.) the price pattern on weekly chart of semiconductors (SOX index or SMH ETF) is really important here. Go to the weekly chart of this sector and you will see a huge Contracting Triangle from early 2011. If this sector breaks below its July 2012 low, this Triangle will be considered a bearish one. In this case, I would not hope to see a major low soon.

Bottom line, I think one should pay attention to the factors mentioned above for early signs of the market direction now. Right now based on the wave intrepretation of the weekly chart of S&P500 and Nasdaq 100, I incline to think that the U.S. stock market has arleady topped out and is heading lower in a significant bear market.
http://www.trendrecognition.com/archives?view=ap&aid=5400

Trade With The Trend!

Alexander
Trendrecognition.com

P.S. Do you want more stuff from us – go here to subscribe for my weekly newsletter

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.

 

The Strength Of The Current Stock Market Rally

The uptrend in U.S. stock market that began in early June remains intact. Those of you that follow regularly my updates know that I turned bullish more than two weeks ago. And on the daily chart (our Short-Term updates) I turned bullish but couldn’t find a way to enter long. On the hourly chart of Nasdaq 100 however, I turned bullish on Fri, Aug 3rd at 2665 level and this strategy is now more than 110 points in profit.

There are many stocks that look quite bullish right now. A good example of the strength of the current rally has been the recent price action in Apple. The stock gapped down on July 25th after a negative earnings surprise but since then has been trading higher and recently has moved to new all-time highs. I have discussed this type of behaviour with you before: when a stock which is in a strong uptrend gaps down, usually this gap is used as a buying opportunity. Because rarely an uptrend can reverse on a negative news. This time was no different and Apple is now one of the leading stocks on the way higher. The stock market now looks bullish so I expect the current upmove to continue well into September as well.

However, there is one sign that the current rally is not broad-based. Last week as the U.S. indexes were moving higher to new highs, the emerging markets behaved quite differently. Actually many of them pulled back or consolidated their previous gains (China, Russia, Turkey) and did not moved to new highs. When the emerging markets are lagging, that’s not a good sign overall. I just want to remind you that the emerging markets topped out in early March this year and a month later the U.S. stock indices did the same. And I continue to believe that the emerging markets are the leading indicator and if they top out now (or in the next few weeks), then the U.S. stock market average will do the same within a month or so.

Trade With The Trend!

Alexander
Trendrecognition.com

P.S. Do you want more stuff from us – go here to subscribe for my weekly newsletter

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.

More on News Impact

The S&P500 market is called to open near the 1340 key support level. This level was major support in early March and then it provided support a few times last week. But the daily and hourly charts look quite negative now, so it appears the 1340 level will soon give way. Add to the negative chart of S&P500 the fact that Nasdaq 100 is leading on the way lower and that the emerging markets are even weaker. So, the odds do favor a breakdown here. Should this level give way, I would expect a panic sell-off. Why? Because many institutional buyers (mainly hedge funds) may decide to exit all at once. This can quickly bring losses twd 1300 and slightly below. If the bulls manage to somehow save the 1340 level, we may see a reaction rally back twd 1378, but eventually I believe the market will break the 1340 level.

If you remember last week I talked about the news impact using the Apple example. The Apple good earnings was a good example how the market would use a news-driven rally to sell-off. Last week there was another worth noting example: the Cisco Systems (CSCO) news. I encourage you to take a look a the CSCO daily chart. You will see that prior to last week there was a textbook Head and Shoulders’ pattern that had developed for the past 3-4 months. This topping pattern was broken on the downside, i.e. CSCO was already in downtrend. And then on Tuesday the CSCO CEO came out and said he didn’t like the trends he was seeing in the way his customers spent. That scared the shareholders and the stock declined sharply.In this case, the company’s news simply confirmed the new trend that had just started.

Best to your trading,

Alexander

Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.

News Impact

In my last publication I talked about how difficult the trading in S&P500 would likely become. The point was that I believed an important top was already in place but I expected the move down to be quite volatile and choppy. So far the market has behaved in that manner. S&P500 first declined to 1357, then rallied sharply to 1415 but failed below the previous top (from late March) and pulled back sharply again. Now it is sitting just abv the April low at 1357. Should it break below there, the focus will be on the 1340 level. And don’t forget,the correction phases usually take more time than the previous upmoves so I expect the pullback that started in late March 2012 top to last at least 4-5 months. So, while my outlook is bearish for the following months, the price action is likely to remain quite choppy with lots of strong rallies along the way. Reffer to my previous publication on how one can trade in such market.

Today, I’d like to talk more about the news impact. As you know I believe the news has no impact on the market price. There may be some initial impact once the news is released, but then the price action has nothing to do with the news interpretation. A typical example is the recent price action in Apple. As you know AAPL topped out in early April near 644 level and declined sharply to 555 when the earnings news was released. The news was extremely positive and the stock gapped up the next day and opened at 615. Soon after the open the stock reached as high as 618 and this level has never been since again since that day (April 25th). Despite the strong rally in the stock market at the end of April, the Apple stock underperformed in the following days. Eventually it brought the entire market down and closed last week at 565 – just a few bucks above its April low. This is a really good example of how one should not react based on the news. Should you have decided to bought AAPL after the earnings news (i.e. at 615) you wouldn’t have seen the prices ahead of you. As we have discussed many times, usually the excellent stock news are sold-off to the public that is buying the stock and guess who is selling – the smart money who have bought the stock much earlier. I learned that lesson long ago and decided never to base my decision on the companies’ news. You may make other mistakes, but this one should not be made. Unfortunately many people make this mistake over and over again even if they see clear evidence that this is not a good approach to the market. They just can’t help themselves to participate when there is an excitement on the market after a positive news. Don’t do this mistake!

Alexander

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Disclaimer: The services provided by Trend Recognition Ltd are intended for informational and educational purposes only. At no time will Trend Recognition make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. The service is not a recommendation to buy or sell securities or an offer to buy or sell securities. The publishers of Trend Recognition website are not brokers or registered investment advisors and are not acting in any way to influence the purchase or sale of any security and/or its derivatives. You should not rely solely on the information provided on this site in trading. See the full disclaimer here.