Apple: An Update (Bearish Call was right)

This is an update on my previous blog on Apple on Nov 9 this year (http://tecknicaloutlook.blogspot.sg/2012/11/apple-is-doomed-like-microsoft-of-2000.html). Look at Chart 1. After the breakdown from touching all time high to above USD 700, I argued that it was forming a massive head and shoulder reversal. At the point in time, it would have a last rally which is to form the right shoulder top. The rally ought to go back up to 600-640 and I was right. The recent high was USD 598. This was a good chance to take profits on any existing long positions. Look at Chart 2. Now it has fallen again and is nesting right on the head and shoulder reversal neckline at USD 518. It may just consolidate around here before heading lower. My first target will be the uptrend line from 2009 low at around USD 470. The objective low will be about USD 320. That is the level we saw in 2010/2011. Unless Apple comes out with a stellar product, outlook remains bleak for now. Chart 1: Apple Chart on 9 Nov

Chart 2: Apple Chart Today

USDJPY Double Top: Targets 80.6-81.2

The move in USDJPY upwards has been too fast and based on a massive QE plan if Abe gets elected. Fact is Abe hasn't been elected yet and even so, will he be able to act on the QE plan he has proposed which has led to a huge move in USDJPY lately. In any case, there seem to be a double top in the daily charts right now. I will sell here up to 82.5 for a target to 80.60-81.22. Closer to the elections on 16th this month, USDJPY bulls may get jittery and start winding down the longs started from 79 levels. This will add fuel to my short position from here.

China A Share Weakness Continues (Buy nearer to 1900)

The leadership transition was smooth but the optimism has given way to continued weaknesses in the China A Share market. In the longer term, I am still positive China but I like to see the current weakness work its way down before going long China A Share. First support comes in at 1900 where the red horizontal line shown should hold. Stronger support comes in at 2008 market low at 1800 (the white horizontal line below the red line).

S & P 500: A few good reasons to go long risk across the board from here to 1370.

Chart 1: SPX Daily

Chart 2: SPX Weekly

Chart 3: NYMO Daily

Chart 4: VIX Daily

Chart 5: EUR Weekly

A few good reasons to go long from here till year end: 1. Chart 1: Triple top breakdown price objective been met around 1375 with daily oversold indicators and MACD showing bullish divergence. 2. Chart 2: SPX is finding support at 1380 (as identified yesterday being uptrend line from June 2011). 3. Chart 3: NYMO (market breadth)at a range low which has held for past four months at SPX market lows and we are here now. 4. Chart 4: VIX not breaking any higher and showing bearish divergence here below 20. 5. Chart 5: EUR Daily and Weekly recovering from overbought levels and finding support at 38.2% retracement and also forming a bullish flag. The above call will wrong if S & P 500 breaks below 1352. I am looking at year end upside of 1460-1474 for SPX 500 from here.

Apple is doomed like Microsoft of 2000? Get out of it at this last leg rally to USD 600-640

Microsoft in the tech boom of 2000 was the market darling. It could do not wrong at that time and was targetted to be the first trillion company but post 2000,it broke down and never recovered past its all time price since. Apple looks like following Microsoft's path. Despite the Iphone 5 and Ipad success, the share price after touching USD 700 has broken down sharply. Key support at USD 600 was taken out too. Now after touching a interim low of USD 530 or so, I think it is ripe for a short term rally. However, this short term rally is probably finishing off a massive head and shoulder top reversal move. This is the last leg or right shoulder move which should bring price up to USD 600 to USD 640 potentially. Sell your holdings if it does move to the USD 600-640 price level for the next leg down will probably be cruel.

Apple: Failed Attempt to go above 700 sees it down to 600 at least from here

My prev post mentioned that Apple will rebound from oversold levels and make an attempt to go above 700. It did rebound but has since broken back down again. This failure sees it breaks two key support. So I think it will drift down to 600 first in the near term.

What's wrong with Apple? Look to buy here if optimistic about its outlook.

Apple touched 700 to a high of 705 on 18th Sep after selling near 2 million units of the Iphone 5 in the first 24 hours. Even after selling record 5 million units thereafter, the feel good factor seems to have disappeared. In fact, it has fallen 6.5% since. Right now, it is still hovering above the 50 day moving average around 650 and with daily indicators oversold, looks like will rebound from here. I will put a buy here for another upside attempt at 700 with stop loss below 650 or so.

Shooting Star in Sterling Pound on Friday. Bearish GBP

Sterling pound attempted the 1.63 (2012 high) on Friday but failure to close above it and the ensuing shooting star formation means near term it should fall. ST Bearish and could target 1.60-1.61 near term.

SPX should top here to target 1320

4 reasons it should top here: Intersection of the two resistance trend lines (one joining 2007 high to the two peaks near 1425 this year and the rising wedge) Secondly, bearish divergence in the MACD and Stochastic. Thirdly, a weekly Doji candle close last week suggests indecisiveness or exhaustion for this rally to continue. Lastly, Rising wedge with bearish divergence is a classic reversal sign. Sell ahead of 1425, target 1320

Breadth is not confirming the current S & P 500 rally

As index goes up, to be sustainable, breadth should go up too. But as SPX move higher, the NYMO and NYSI (breadth indicators) are moving lower. A negative divergence and another evidence why it looks toppish around here.

Topping process in the markets?

Just looking at some markets and they look quite similar in nature. Using weekly, looking across SPX, MXASJ, FSSTI and Aussie, they are trading at the near the top of a weekly resistance line. And last week, SPX, FSSTI and Aussie both flashed sell signals (demark). At the same time, VIX has also fallen to the bottom of a weekly support line and also have a buy signal flashed last week (demark). Expecting a pullback soon and no point chasing at here. Given the summer lull, won’t be a huge selloff yet. SPX: sell here, SL 1422 and above, TP 1360

Break in AUD ST uptrend: Short term top in risk rally

There is a break in Aussie ST rally from late Dec 2011. Despite the RBA move in holding interest rate steady and China Feb PMI near 50, it has failed to close above 1.08. This suggests the long awaited pullback is here.

Could see AUD pullback to 1.04-1.05 from here and allow us to buy on pullback in other equity markets for an eventual May top.

However if the MT trendline from Oct is broken at 1.0290 (white line), then the feel good rally from Oct could be over.

Nothing is complete without looking at other markets:

DAX: has hit into key resistance (76.4% retracement of 2011 high to 2011 low) around 6978 yesterday and could pull back.

MXASJ: Is hitting into resistance near 538 (drawn from 2011 high) and also flirting around 61.8% retracement of 2011 high to 2011 low (528).

HSCEI: hit into key resistance of 11916 (drawn from 2011 high) and just above the 61.8% retracement of 2011 high to 2011 low (11588).

VIX: Recent low was around 18 compared to SPX recent high of 1367. Last year’s SPX high of 1370 coincided with VIX around 15. A mild bullish divergence here.

In nutshell, other markets also seem to be hitting a wall too. ST, not inclined to chase upside. MT picture for equity markets is e same as AUD, so long trendline from Oct last year holds, could use this pullback as a chance for an eventual May top.

AUDJPY: to close out prev short position here

Decided to close the previous short AUD long JPY position here. Hourly chart is showing bullish divergence and a potential double bottom. Will close it around 81.00.

S & P 500: Hitting into resistance drawn from 2007 high

The rally from the Oct 2011 lows has hit into a multi year resistance trend line drawn from 2007 market high at 1334 last week. With the daily and weekly technicals overbought, a pullback is due.

Econ data has been improving and therefore I may just sell half the position for this tactical short.

First support comes in at 1270-1275.

Sell AUDJPY here

Sell AUDJPY here: Take profit at 78.90-79.20 and stop loss above 84.

There was a doji close yesterday with technicals looking overbought on daily and weekly hitting into 50 week MA resistance. Looks good for a short aud long yen trade here.

Gold Short: Stopped out by Fed low rate announcement

My gold short was taken out in a swift move on Wed by the Fed announcement that rates will remain low till 2014 and potential of a new QE3 if things doesn't improve.

Technically gold looks like it has broken out of a consolidating triangle and could look to hit 2000 from here. But with daily overbought, I will scale in a long position when it pull back down to 1676-1700 from here.

Will update soon.

Short Term Tactical Trade: Short Gold here to target 1600 first

There has been a massive USD 100 rally off the recent lows of 1522 to current levels of 1637 which is near 200 day MA. With ST indicators on the overbought scale and failure to close strongly above 200 day MA, I am inclined to take a short term tactical short in gold VS USD.

My initial target is 1600 and with further breaks exposing 1550 and recent lows of 1523 or so.