AAPL – The End Of The Beginning

I’m drawing a blank on the short term setup side this morning. Unfortunately everything on both the FX and commodities side has already run off and the few setups which presented themselves an hour ago would have been too early for most of you guys over in the States. So as to earn my keep this morning I thought I’d do a quick update on AAPL, which of course has been garnering renewed attention since its drop through the coveted 500 mark.

Let’s start with our fearless P&F chart which, as my subscribers know, has been pointing downward for quite a while now. After some recovery in late December we got a high pole warning on January 4th. On the 14th this chart flagged a triple bottom break-down which triggered the current bearish price objective of 410 (yikes!).

If you think that’s bad then take a peek at my next chart:

Both long term panels are looking rather sad now as AAPL has already breached its 100-week SMA as well as its 25-month SMA. Unless we see an instant reversal today the weekly sell signal is already in the bag. And that one alone leaves the door open for a much lower target. Now including today the monthly panel has five sessions left to reverse the monthly sell signal. If AAPL closes the month below 475ish then this would represent double confirmation of our P&F target and possibly much more.

How equities are going to continue their stride upward without their flag ship symbol is anyone’s guess. I however caution you to blindly start accumulating short positions. As you know I have repeatedly been pointed out that tops are a process, they take time – correctly timing them is almost impossible. And as we all know the bears continue to fight major forces across the hemisphere who have no compunction about flushing our currencies down the toilet in order to keep up appearances until the next election cycle. In other words, don’t fight the Fed, the BOJ, the SNB, the ECB, you name it…

All that said – I do not think that this advance is healthy and as such I am not exposed to the long side (in equities) to any major extend. The bulk of my current equity exposure is balanced out as I make a point of keeping things delta neutral. However, as I said several weeks ago [1] [2] – AAPL should be treated as our canary in the coal mine. A confirmed weekly and monthly sell signal for AAPL in my mind is a first sign of where this bull market may be heading. To quote one of my favorite historical heroes (I know this may be strange coming from a German):

Thank you Winston, I couldn’t have said it better. There’s a storm brewing, pack a cigar and a raincoat.

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.

Cheers,