A Weekly Chart Update on Apple AAPL

Feb 26, 2009: 8:25 PM CST

Let’s take a moment to see some interesting developments on the weekly chart of Apple Inc (AAPL):

I’ve added a little possible Elliott Count, assuming the 2007 was the price peak for the time being before beginning a corrective phase down.  If this count is correct, then we’ve either reached the bottom for the time being, or we might not be that far away – provided the $90 per share level holds (we will need to re-assess any possible bullishness should $90 break).

It appears that the C Wave down has sub-divided into its own 5-wave structure, and perhaps the birth of a Wave 1 is underway… but it still might be too early to anticipate this.

Price came up into confluence resistance and formed a Doji on the weekly chart (which is a sell-signal no matter what your analysis shows) and we’re perhaps in the middle of that downward inflection.

The momentum oscillator has been diverging since October, much like that of many stocks and in fact the major US Equity Indexes.

To get super bullish on Apple, we’d need to see a break above the $100 per share level, and until then, the bias remains neutral to bearish until proven otherwise.

Price is still in a confirmed downtrend and is beneath all three key moving averages, and the 20 has just served as resistance at the $100 level.

Strength in Apple (AAPL) would be a boost in the overall market, as that could indicate consumer or at least investor confidence might be growing.

Keep watching this and other technology stocks closely.

Corey Rosenbloom
Afraid to Trade.com


NASDAQ Outperformance and Structure

Feb 26, 2009: 10:49 AM CST

I tend to focus mainly on the Dow Jones and S&P 500 Indexes, but what’s perhaps going unnoticed is that the NASDAQ Index has outperformed them both, having held above its November lows and is showing relative strength.

Let’s take a look at the Daily NASDAQ Chart:

Keep in mind, the S&P 500 tested its 741 November low and the Dow Jones broke it, hitting a 12-year low (the S&P missed a 12 year low by 2 index points).  The NASDAQ held 100 points (about 7%) above its lows.  Also, the NASDAQ is about 20% above its 2002 lows at 1,100 – that alone shows relative strength over the last few years.

Technology giants such as Apple (AAPL) and Google (GOOG) are well-above their respective November lows which is adding strength to the Index.  Other technology companies are holding their own throughout the upward correction in the market since November – some even have confirmed uptrends on their daily chart with prices trading above their 20 and 50 day moving averages.

If we look at the Relative Strength Line (Bottom of Chart), we see that the NASDAQ underperformed the S&P 500 until December when the ratio line broke a down-trend line (signaling the beginning of outperformance) and that trend has continued to this day.

Pairs traders can take advantage of such performance by buying the QQQQs and shorting the SPYs (or equivalents) to try to take advantage of over/underperformance, but that’s a whole other strategy that may not be appropriate for newer traders.

Generally, it’s a good sign for the market when small-caps and technology companies outperform the S&P 500, but we should take nothing for granted in the current environment.

Keep an eye on the NASDAQ and its Relative Strength Ratio for additional clues going forward.

Corey Rosenbloom
Afraid to Trade.com


Sell Signal in Silver?

Feb 25, 2009: 9:02 PM CST

Did price trigger an official sell signal in Silver this week?  Let’s view the weekly and daily charts for any clues.

Silver Weekly Chart:

We’re seeing possible resistance at these levels, which corresponds with an early 2007 high but not much else since then.  It’s close to a 50% Fibonacci retracement from the $21 peak to the $8 bottom, but not exactly.  Truncating the spike highs places the 50% retracement at $14.65 (to the low) while incorporating the spike high places it at $14.92 (both down tot he spike low in October 2008).

Anyway, there may be support via the moving averages, but it looks like odds favor some sort of pullback/retracement/reversal in silver (and gold) prices.  Let’s drop to the daily chart.

Silver Daily Chart:

What got me interested in looking at this further was the breaking both of the steeply rising trendline on the daily chart as well as the Arc (red) from the Rounded Reversal (which has played itself out perhaps).

Price is above all key moving averages and is in a confirmed uptrend, so any short at this level would be counter-trend (on the daily chart but in the direction of the weekly trend), but perhaps buyers might be tempted to take well-deserved profits at these levels which could add further downside momentum.

The momentum oscillator isn’t giving us any clues, other than the black line (3/10) broke beneath the Red Line (trend line) giving a sort-of aggressive signal.

Price formed a doji at the $14.50 level prior to the reversal, and the large down day (candle) Tuesday is a sell-signal.

Let’s keep an eye on silver and gold for clues of additional downside momentum, and as to whether this retracement is a simple pullback buying opportunity… or something more ominous.

Corey Rosenbloom
Afraid to Trade.com


The Dollar and Japanese Yen – FOREX Chart Video

Feb 25, 2009: 1:14 PM CST

Might the US Dollar be the lesser of many evils?  Adam Hewison tackles this question in his latest public video “The US Dollar and Japanese Yen (USD/JPY):  What Does the Chart Show?”

Hewison shows multiple timeframe views of the currency cross and shows some of the latest trade signals and chart patterns that have set-up and then discusses what the possible direction of the pair going forward.

(Click the chart for a larger imaage – chart created by Corey with TradeStation)

Price has now crossed above the 20 and 50 day EMA, and these averages have now crossed ‘bullishly,’ setting up potential support.  In addition, the 3/10 Oscillator has been hinting at a lengthy positive momentum divergence which is playing out now.

In text introducing his video, Adam writes:

“Here we are going to hell in a handbasket in the US, yet everybody wants to own dollars.”

“I have to say that the dollar may be the lesser of all evils in the financial world. Here’s what I mean by that statement: I heard that a Chinese businessman who lives in Hong Kong said that the stimulus plan would not work in China, simply because there is so much corruption.”

This is an educational trading video to show you one of the most important technical chart formations and how to incorporate our “Trade Triangle” technology to come up with big winners.”

(Clicking the Image opens the video)

Thank you to Adam and staff for making this video available.  I always try to keep you updated on some of their videos, but members receive all videos (including non-promotional videos) and updates.  Check out the Market Club to see if you might benefit from their services.

Corey Rosenbloom
Afraid to Trade.com


Intraday Divergences Preceding Reversal

Feb 24, 2009: 4:29 PM CST

Today’s DIA action featured a lengthy positive momentum divergence heading into the morning’s open which wound up being a valid pattern that gave ample warning of its developing structure.  Let’s view it both on the 15 and 5 minute intraday charts.

DIA 15-min:

A quick take at the structure shows a “Three Push” pattern completed on Friday which preceded the large spike-up into EMA resistance which failed to garner further upside, as the indexes broke to new lows.  Good example there.

We had a failed bear flag yesterday (in that it did not meet its measured move downside target) though price formed a positive momentum divergence going into this morning’s open which preceded the price reversal (counter-swing) back to the upside.

Notice that the end-of-day volume was a little lackluster, and could be a non-confirmation of today’s rally.

DIA 5-min:

The 5-minute timeframe offered interesting opportunities today.

We began the day with a gap-fade (price gapped then ran into EMA resistance, setting up an excellent short-sale trade back to yesterday’s close) which got its target literally to the penny before finding support (on a triple swing positive momentum divergence, just after a “Three Push” pattern completed into yesterday’s close).  The doji (dragonfly) at support offered perhaps the best trading opportunity of the day, second only to the Cradle (confluence) Buy just after 1:00 EST.

Price rose to an intraday high at 11:00am, forming a new momentum high which suggested that perhaps an actual high was yet to come – keep in mind the structure was still officially in a downtrend, though the structure was shifting at this point.

Price formed a bit of a flag-style retracement down beneath the EMAs (the 20 did not cross above the 50 at this time so the structure was still bearish and price was still in a downtrend) though when price broke above the resistance line, it also broke back above the 20 & 50 EMAs and pulled back to confluence support (The “Cradle Trade” as I so call it) which set-up a very high probability trade (with a stop just below the prior swing low at $71.40).

As you can see, others caught on to this trade idea (or at least demand overcame supply at this critical area… perhaps in part from shorts covering) and we had a massive rally to the upside which, as we took out the 11:00am swing high, officially reversed the trend of the 5-min chart to up.

The next high probability trade set-up came as we retraced back to the rising 20 EMA at 3:00, forming a type of bull flag (that fell just shy of its target).

Now, we have a new price high on a negative momentum divergence, and a weaker than expected volume reading (volume is supposed to increase at the end of the day due to the “Volume Smile” effect).  This, along with the negative divergence, is a technical non-confirmation in development.  Let’s see if it plays out.

There were lots of interesting things to take away from today’s trading session.  Annotate your own chart in your own style to see what else you can find.

Corey Rosenbloom
Afraid to Trade.com

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