Apple Poised For a Big Move $AAPL
I have been watching Apple Inc. ( $AAPL ) form a symmetrical triangle for the past two months. This is a Continuation Pattern, which means that the triangle is used as a way to head higher if the trend has been upwards and with AAPL it has been.
A symmetrical triangle is generally regarded as a period of consolidation before the price moves beyond one of the identified trendlines.The sharp price movement that often follows a breakout of this formation can be captured by traders who are able to identify the pattern early enough.
The Symmetrical triangle pattern needs to have a few things working for it and we will check them off here.
1. Trend Should be at least a few months old: Check !AAPL is from march to december.
2. Duration of pattern should be at least 3 weeks old: Check! This pattern is 6 weeks old.
3. Breakout occurs between 1/2 to 3/4 of the way through the pattern: Check! It's about 3/4 of the way.
So now that we checked a few major points off let's look at a price target. We take the distance from the widest end of the triangle and in this case is around $20.
From the breakout at around $200, this being a bullish trend apple has been in we add $20 to the upside and put it at ~$220 for a potential breakout target.
There are a few hurdles here for AAPL though the $207-208 area is major resistance so if it can break that $220 is well in sight.
I bought a January $230 Call option at 0.23 to prepare for the move instead of putting major capital in the stock
Here is the chart (Click to Enlarge)
Update: I tried posting it last night but my host was down so i gave up. $AAPL is currently at ~$207.50 (in between the resistance I mentioned)
I have also sold my Call options for a hefty 140% Profit from yesterday's buy-in price, if Apple breaks above 208 I might be re-buying some.
Merry Christmas!!
Volatility Index $VIX Is moving higher.
On Friday The VIX went up 23.95% while the market fell well over 2.5%.
VIX is a popular measure of the implied volatility of S&P 500 index options. Often referred to as the fear index, it represents one measure of the market's expectation of volatility over the next 30 day period.
With the upward movement in the past 2 weeks the VIX has successfully broken a trend line going back to November 2008
See Attached Image (Click To Enlarge)
The VIX also had a bullish candlestick pattern on the 2D frame (2 days per candlestick)
Defeniton of this candlestick pattern is quoted below from Candlesticker:
Bullish Three White Soldiers Pattern is indicative of a strong reversal in the market. It is characterized by three long candlesticks stepping upward like a staircase.
The following are two charts; one showing the Three White Soldiers pattern on the 2D chart the other showing it on the hourly.
2Day Chart (Click To Enlarge)
And finally the Hourly chart (Click to Enlarge)
What does the bullish Vix momentum mean? Well by itself it means nothing to me. But when combining it with the increasing TED Spread, Broken S&P trendline, Numerous bank failings each weekend and many more indicators then it all signals that things are not well and the jobless recovery is not going to last much longer.
As always use caution as these are my observations and I do not make decisions for anyone other than myself.
Happy Halloween! 
-K
$TED Spread caught in an Ascending Channel Pattern
Let's start off with once more defining the TED Spread.
The TED Spread which measures the general risk in the economy. TED increase - is a sign that lenders believe the risk of default on interbank loans is increasing.
I first mentioned TED Spread around September 28 and what occurred was a decline in the markets the following week.
Here we are a month later and the TED spread hasn't lost steam and in fact it is now in an Ascending Channel (Bullish Pattern)
Price Channels usually show trends, With the moves in the TED from Sept 14 till now we are seeing unrest in interbank loans.
I won't keep the TED out of my radar but wanted to document the current possible move upwards. (Which would signal a major market correction underway.)
In the attached image I realized the lowest trend line isn't parallel to the other two but it's close enough to be valid for my benefit. (Click Image to Enlarge)
Happy Investing from K the Investing Freak.
$SPX Psychotic Line Resistance
It was a fun day today.
Market opened up and rallied 10 points by 10:45AM. It was all downhill from there but the big kicker came at 3:10-4PM when the market dropped 17 points.
I will let 2 charts and this link be the hint of what I think we are going to do in the next few days at least.
Chart 1 is a closeup of the past month with the trend lines drawn almost a month in advance. (Click to enlarge)
Chart 2 is a zoomed out view from where the rally began. (Click to enlarge)
That's all folks. These are the charts promised almost a week earlier.
Have a safe investing season this fall/winter it should be epic.
-K
Downhill from here Or more upside?
The SPY made a hanging man candle today and so did a few other stocks like C (reporting tomorrow before open)
It happened on a bullish trend so it is defenetly a bad sign.
It is late but I will update tomorrow with more writing and of course my favorite thing; charts!
-K
S&P at 1035 by October 1st? I Believe it is doeable.
On September 23rd at 9:24Pm I wrote the following prediction on Twitter.
Prediction Alert: $SPX 1035 By Oct 1st9:24 PM Sep 23rd from web
I made that prediction based on a few trend lines I was watching that had begun to break down. This is from September 16th. it took then 1 full week of the SPX moving along that trendline before finally breaking below. (Click To Enlarge)
The next day my system began throwing out SELL alerts and that confirmed my bearish case. I acted upon a few of the alerts and am happy to say that so far they are green.
Here are the alerts for the Major indices.
In my previous post I was expecting the correction to start 10 days earlier than it actually did and that post now stands at 67% accuracy.
Today S&P Closed at 1044. Will it close at or below 1035 by October 1st? I believe it will, what about you.
Have a good Weekend and check out the rest of the signals by clicking above on the "Current Picks" Tab.
-K
The last leg of my August 27th prediction.
Well one last time revisiting my latest predictions since august 27th.
Checklist:
Fake Correction? Check (August 27-Sept 2nd)
Mini Recovery? Check (Sept 3rd to Sept 11th)
Major Correction? In Progress (Sept 14th to ... )
Check the attached Updated chart. (Click To Enlarge)
The Orange Line Scenario Happened for the most part except the fakeout below a trend line (circled above)
From the Sept 1 Blogpost:
Scenario 1: (Orange Lines) Bounce back the next 5 days to reach possible 1040 then drop back to 1000’s and head lower going into October.
I am 2/3 so far looking for a full 100% return on my prediction.
Have a good one.
-K
$VION; A perfect trade using the Morning Star Pattern
Today I had a chance to experience those special conditions that cause a day trade to turn into great profits.
The stock chosen was VION. It was down 45% for the day on no news. (It is a Pharmaceutical so I thought some bad drug news came out).
As I watched the price slide down like a waterfall I saw a reversal form. This reversal in candlestick patterns is called the Morning Star.
The patterns is a bottom reversal signal. It is most effective following an obvious downtrend (in this case from 6.50 to 2.20)
According to Candlestick Trading Forum:
The Longer the black candle and the white candle, the more forceful the reversal.
The Pattern psychology for this specific pattern says that when the price goes down fast sellers get panicky. They keep selling off and as they are doing that bulls begin to step in.
Now that I have explained the pattern I used time to explain the entry and exit signals.
Entry 1: 100 shares at 2.90
This was an initial entry to test the playing field.
Entry 2: 100 shares at 3.50
I was looking for price to close above 3.25 for 2 consecutive candles to buy into strength. 3.25 if you can spot it is a resistance from earlier candlesticks.
Exit 1: 100 shares at 4.01
4 is a round number so that makes it psychological for people to dump shares
Exit 2: 100 shares at 4.53
Looking at the far left 4.53 is around where the 2nd large red candle begins. and if you look up further more candles tend to end around 4.75.
Initially I had the limit sell order at 4.74 but I then decided not to push my luck.
Conclusion: After concluding the trade I watched the price go at high as 4.90 then in one big swing it crashed back down to 4.
Overall it was a great risk reward ratio and a well thought out trade. Morning star followed by an initial entry to test strength of the pattern and if it goes your way add another position which will allow you to scale out. Now this did take 2 day trades out so if you have under $25k account you will only have 3 trades in 5 days so it's really not ideal to do every day.
Here is the image to illustrate all the text in this post. (Click to Enlarge)
Hope you enjoyed it and while I do understand this is not a stock pick because it is already gone I hope it serves as a teaching tool to how simple trading can be at times.
-K
Fake correction followed by a fake rally?
The past 4 days The S&P and many other markets have traded within a very narrow range.
There have been doji candles galore. trendlines, averages, bullishness ratios and even the Elliot Wave expert said rally is ending and a correction will come sooner or later that will surpass the march low.
I have taken the liberty to put up a few $SPX charts with possible short term outcomes.
The big picture is in the first image (Click to Enlarge)
I am looking for the S&P to go to 1010 to lure in bears and then bounce off the trendline and make a higher high to fool the bulls and shake the bears. Then lastly (not in these pictures) I am looking at 950's as a conservative bet.
Here is a closer look short term view. Upside target is 1040-1050.
I hope you enjoy my opinion and feel free to comment your own.
-K
Shooting Stars are everywhere. Is it time to turn into a growling Bear?
I noticed something strange today looking at my favorite timeframe. (half a day )
Stars were shooting everywhere.
Many symbols like $SPX $SPY $INDU $OEX $COMPX $QQQQ etc had the shooting star pattern to an extent.
I chose to include only 3 to keep it simple
Now before I insert the image I would like to explain what a shooting star pattern is thanks to Stockcharts.com
Shooting Star: A single day pattern that can appear in an uptrend. It opens higher, trades much higher, then closes near its open. It looks just like the Inverted Hammer except that it is bearish.
Here is a visual aid to go with the definition. (Click To Enlarge)
Now bear in mind this is my own opinion of what I see happening. My system has yet to give a sell signal but today I did receive a sell in GLD so if gold is losing value that means market is going down (most times that's the correlation I've seen.)
Now listen up you Goldman Sachs! Stop reading my blog and proving me wrong. Let the market go down like it wants to.
Thank you very much.
-K
5 Days Up…5 Days Down?
Well I am back I am sorry for posting once a month.
Past 5 days we have had a huge rally but the volume has gone the complete oposite.
It seems like someone has been manipulating the market instead of this being a real rally.
S&P is still well within it's downtrend channel that started back in september so This rally is another setup for failure. Notice the volume that I mentioned...
I dont have much to say other than I am short at the moment.
I hope everyone had a good thanksgiving and time to get back to work.
Is Dow Jones ready to recover?
Almost a Month ago I wrote a post about how the dow had yet to bottom. See: The Dow Jones Industrial Index has not yet bottomed ,at that time the index was at 11,842. A week later I followed up with a prediction that the Dow Jones Industrial would bottom at 10,800 (See:Prediction: Dow Jones Industrial bottoms at 10,800.)
On July 15,2008 the Dow Jones Index fell to 10,827 to make a new 52-week low. That new low came very close to my prediction and soon after it began rebounding. Since the weekend came and I found some time to go and revisit the chart for the dow I now think that the index has bottomed out and should begin to climb.
I believe the market will begin recovering because of a few reasons.
1. 10,800 is a very strong support zone going back to 2006
2. Oil prices have recently fallen from $146 to $128 (maybe that bubble is deflating)
3. The chart shows that the sellers are moving out and more buyers are beginning to take over (green and red lines almost crossing. Green is buyers, red is sellers)
4. At the end of the chart is the amount of money being put in the market. Since mid May it was in a downtrend which meant people were taking money out of the market and now it has broken out of the trend.
As you will see in the chart below however, today's action is within the downturn trend line and it needs to close above 11,500 or we might not have hit recovery period just yet.
Without further adieu i present to you... the Dow Jones Industrial Recovery Chart.
At this point i have invested in stock symbol (DDM) which has the top 30 Dow Jones Companies.
It goes mostly parallel to the Dow Jones Industrial Index. You can check out my current holdings at my Covestor page.
If you have any comments feel free to post them.
