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Apple and Stock Market Fully BakedPeter Vogel Shock and Awe is probably what a lot of people are feeling today, as the supports under the market keep crumbling away. What is surprising is that people are surprised, but I guess that is a result of having the highest bullish sentiment amongst market analysts in 26 years. Disbelief that the markets have topped is a difficult emotion to overcome. For InvestorKey the signs were clear, as we discussed the topping process in our Blog starting in mid-December. Our bearish inclinations lead us to recommend short positions using stops as the preferred entry method. On Jan 16 we shorted the Retail ETF-RTH @ 59.30, then on Jan 23 we shorted Apple-AAPL at 547.70, and on Jan 24 we shorted S&P 500 ETF-SPY @ 181.60, Financials ETF-XLF @ 21.49 and Basic Materials ETF-XLB @ 44.69. Our Jan 16 Blog discussed what all the analysts were projecting for Apple’s stock price - $600, and their fundamental reasoning of their deal with the China telecom company and the potential for future sales growth. We thought that the ascending wedge pattern that developed from early 2013 and broke to the downside at the beginning of Jan was a harbinger of something not quite so optimistic. We stated that we believed the rally from Jan 10 to Jan 16 was a ‘suckers rally’ and we were preparing to go short. In the meantime, we did short the Retail ETF-RTH that day, because 3 days prior a number of ETFs gave a warning shot that the markets were preparing to tank. In our Jan 22 Blog titled “Apple Crisped”, we stated, “tomorrow we may be on the cusp of some more stocks and sectors breaking down, and even though I am an Apple product lover, I wasn’t opposed to making some money from their stock’s misfortune”. I did mention a downside target, but I think I’ll keep it for my Blog readers, as I don’t want to receive any hate mail from Apple employees, or perhaps buy-side analysts. I went on to discuss my technical reasons for the short recommendation and will display those charts below so you can come to your own conclusions. (Click on images to enlarge) AAPL and Apple/Nasdaq ratio chart - Weekly
Apple – AAPL - Daily chart
### Jan 31, 2014 About Peter Vogel: The Writer of this Blog began his investment career in 1981, first as a Floor Trader and then as an Investment Advisor for a major securities firm. During that time he acquired several securities and options licenses and became registered as a Commodity Trading Advisor (CTA). He also co-founded a venture capital organization that helped finance and commercialize a number of new technologies. Since the beginning of his 33+ years of investing, he developed his own style of technical analysis by focusing on ratio analysis and money management techniques, creating methods that often allow him to buy near precise turning points with confidence. His decision to publish this information stems from recognizing the abundance of misinformation and bad analysis that exists and the need to help investors understand how to understand and view the markets and invest properly. Some of his favorite trading mentors are Larry Williams, Martin Pring, Thomas DeMark and William O’Neil. When it comes to deciding whether or not to use an investment writer’s service, you should understand that their background or so-called “proprietary” gimmickry really does not matter. The evidence in this statement bears itself out by the simple fact that Michelle Williams at the age of 17 won the World Trading Championship in 1997 making a 1000% return, which has not been surpassed since. The only thing that matters is whether their service can help you make money. 321gold Ltd |
