Stock Market Technical Analysis Blog
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Continuing from last night's blog where I addressed the low quality setups constructed on AAPL yesterday and my doubts as to whether or not traders would buy into them were never subjected to the test of regular session trading as they decided to just gap it up at the open. It was no doubt to make sure that AAPL was up on the first morning of iPhone5 sales. Throughout the day AAPL and the market started getting heavy and sold down in the last two hours.
Before we look at the AAPL cluster below, I want to address a divergence developing between the trendline charts of the S&P 500 and that of the SPY in the above charts. The SPY is supposed to track and mimic the movements of the S&P 500 but most traders fully understand it works just the opposite, the SPY leads the S&P 500.
In the charts above, the S&P at the top and the SPY below it, we see they have matching channels but the SPY actually slipped out of its channel whereas the S&P is not even close yet. This is a classic divergence suggesting that traders are not so convinced in the prospects of this QE3 rally. All divergences can go on for a day or two but when they correct there is typically a very sudden movement by one to realign itself with the other. This is something the bulls will have to watch closely especially knowing that AAPL couldn't hold its gap up gains and also sold down in the late afternoon.
Moving on to look at the AAPL cluster below, in the lower chart of that cluster the 30 minute bars chart, we see AAPL gapped back up into its channel but fell back out again in the late afternoon. In that same chart I drew AAPL's secondary ascension channel with gray lines, a considerably more modest but still inclining channel which it is fighting hard to keep from returning to. In the top left chart below, the daily bars EMA chart, we see that AAPL is still feeling lofty. In the chart beside it, the daily candles, we see that today's candle is modestly bearish.
The Fed is still struggling to start a big market squeeze to take the market convincingly higher but so far, it looks like all they can do is keep it sideways or prevent it from selling down much.
The two big picture clusters are updated and shown below the AAPL cluster.
Alan
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Click on image to enlarge
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