June 12 - Monday UPDATED
BotTrigger Trade Update: $AAPL we are in no rush to buy anything on AAPL just yet. We are at extreme oversold on the hourly time frame and the daily is already a touch away from oversold which suggests a strong bounce is coming. But we will not be getting long until we get even lower prices on AAPL from here. The pullback can actually go much lower, which is good for us by a huge margin. AAPL is already down almost -9% in 2 trading days! Usually this unfolds in a week or more. So the depth of this plunge is concerning. At best it suggest that this whole move will need to rebuild a new pattern before breaking out to new highs from here. Yes we will likely see a strong bounce around here...but we expect that bounce will be sold off. If this correction is anything normal then we'll see a strong bounce followed by more selling taking AAPL even lower than where it is today. Also, these pullbacks don't resolve themselves in just a few days....as mentioned, we'll likely see the start of a whole new consolidation pattern occur in this area before July earnings. I'm nearly 99% confident that AAPL is not making new highs anytime before July earnings. In fact...we may even see an entirely new cycle of consolidation that caps the high on AAPL even post July earnings. A consolidation that could very well last until October earnings and then breaks higher for the Santa Claus rally in December & anticipation of January earnings on the results of iPhone 8. Like that is altogether possible. We're definitely getting very long but there is time to wait/observe here. Post coming
June 9 - Friday UPDATED
BotTrigger Trade Update: Remember this buy alert on $AMZN? This a great example of a stock that plunged lower after earnings. Built a new base/pattern & then once the technical picture ripened and there was an alignment of bullish confluence we got long. The point here is this: as this broader pullback unfolds, we'll see the start of some really powerful bases that get cultivated. Cultivation is the key word here. This will open up incredible opportunities to get long in a big way on some new call-spreads that will yield massive returns that far exceed what owning the common will do. We'll be publishing a post on several call-spread options that Members can pick from that range from ultra conservative, conservative, aggressive to ultra aggressive. Just like we did on our AAPL call-spread trades we'll highlight our top choice which will likely be in the conservative category for our highest allocation(s), however we may also enter a "smaller" position in the aggressive category only if we can get absurdly depressed market prices. We couldn't be more excited for this pullback to get deeper. All these names will build new bases & patterns and it's when we get an alignment of bullish confluence on several time frames that we will deploy capital into those strategies. Regarding our FB position, much like our AAPL Stock Replacement Strategy, we will likely be rotating the capital from selling our FB common into a higher yielding call spread near the lows of this correction. For new members who are unfamiliar with this strategy please review → bit.ly/150pcntgain
June 9 - Friday UPDATED
Well it looks like we have a breakdown on Apple. That chart is completely invalidated now. There is no way it is bullish. That's for damn sure. This looks like a double-top set-up now. What's more, we have huge reversals on Amazon, Facebook and Google and a big reversal on Tesla. It looks like tech stocks are taking they're once-a-month beating today. Apple has pushed down to a 25-RSI on the hourly. Now here's the thing. This is just one session. We saw what happened a few weeks ago. One session is COMPLETELY MEANINGLESS. We really need some follow through. However we're getting some intense bearish engulfing bears across the board on all of those names. These bars are very heavy. Take a look below:
We believe that this correction is the real deal start that we noted at the beginning of the week. Let me make clear that this market is a BULL MARKET. Not a bear market. For now the benefit of the doubt continues to go to the buyers of this market. This bearish day is most likely the start of a corrective period where stocks come down a little to SET-UP, BUILD NEW BASES, & BREAKOUT from this bases. Now the depth of those bases could take many of the leaders above down around -20%. Could be much less or this could be the start of something more bearish. For now we'll have to watch closely and examine the market depth overall across the board.
So here we are on our 3 major time frames:
Primary term time frame (months/years) → BULLISH
Intermediate Term Time Frame (days/weeks/months): NEUTRAL
Near Term Time Frame(hours/days): BEARISH
We're reducing across the board many of our legacy positions that have experienced incredible gains. They say you don't sell leaders, well this is true but we've been in most of these for a while now and we're going to say thank you for the gains and get into a position of heavy cash while we wait this out. Cash is King and our goal right now is to get into about 50% Cash. This doens't need to be done all at once. Per the text alert we've decided to reduce many of our leading winners in entire allocations sizes. Please refer to the SMS.
June 6 - Tuesday
So there are a few things I want to talk about today. First, its important to note that Apple has essentially been in a 3-week consolidation period now. And whenever we get a consolidation period like this, it either leads to a breakout or a top. That is what we have seen multiple times throughout Apple's past. The last time we saw that was back in October 2016. Apple consolidated for 11-sessions in what looked like a bullish consolidation and then went into a -12%+ correction.
We also saw the same thing happen in August with Apple consolidating for three weeks ahead of a roughly -7% pull-back, and again in April of 2016 with a -19% pullback, and prior November-December period as well. Take a look below:
The point is that we've seen periods of consolidation for Apple result in the stock peaking and turning lower. The last consolation period we had lead to a breakout. We saw that back in March-April period. This consolidation started in the second-third week of May. It began with two days of consolidation ahead of that very sharp $5.00 sell-off in Apple and the markets. Since then, Apple has mostly consolidated. It has certainly traded under $156 the entire time. The highest point was near $155.50 and the lowest point just under $150 a share. The point here is that we're either seeing a set-up for a breakout or a peak in the stock. Apple has not had a correction now in 7-months. The stock has rallied non-stop for 7-months. The last correction Apple had ended in November and the stock has been rallying ever since. This is the longest period we have seen in Apple's entire history where the stock hasn't had a correction or sharp pull-back of some kind. But not just with Apple, we're seeing this across the tech sector. The point here is this. We are really pushing into some truly overextended periods now. And although it could last a while longer, we wouldn't bet on it. We are bullish on the market overall, YES. But we need to be vigilant at the onset of a corrective period so we can take advantage of that pullback when it comes. At some point there will be a major correction. That's pretty much a certainty. There will be a major pull-back once this rally ends. That pull-back is likely to go for at least 10% in some sectors of the market. We're overdue for it.
Another point why AAPL is running out of steam is showcased in how there is dramatic display of bearish RSI divergence showing it's hand here on the daily chart. Bearish divergence is when you get a higher stock prices that occur on a lower RSI reading. Making new highs whilst RSI going higher is a great thing for a trending stock. But when you see RSI start to trickle lower and each successive new high of share price is accompanied with a lower RSI reading then this is almost always the beginning of a bearish setup. It's not a foregone conclusion that this automatically means AAPL will pullback, but it does increase the odds that this is the next move. Take a look at this next chart showing the bearish divergence of AAPL's RSI (relative strength indicator.) Notice all the instances where AAPL is making higher highs or consolidating while RSI starts to creep lower. This is another classical indicator that there is a loss of strong buyers coming in at this level. Eventually you'll see the sell orders come in an compete with other sell orders that are in line. The sell orders start to jump the Q and get in front of other sell orders and if there isn't enough buyers to fulfill those exchanges then down she goes. That's in a nut shell how this works.
Ok so higher prices occurring on lower RSI is a bellwether warning sign that the trend is losing steam. So this is something we all need to get ready for. Eventually this will crack and there will be profit taking in droves. You're seeing the complacency right here at the top and lack of firm buyers to take this that much higher on conviction. Weaker RSI is akin to exactly that: Conviction. Another metaphorical way of looking at it as the Oxygen in the room or Oxygenation levels of an athlete. I'm trying to simplify this here...when an athlete is running a marathon up a mountain and with each passing mile up that mountain the oxygen levels are lower & lower...the athlete will eventually start to become poorly oxygenated and start to stall in his ascent. And then eventually he/she will have to come back down that mountain to recharge. This is just a metaphor but understand that this principle runs in market parable. It will be very hard for AAPL to run that much higher based on where it's at. Eventually this phase will too shall pass and we'll get a bearish period.
I want you take keen notice of how the top started in 2015 when AAPL went on a monster tear about 23% higher off the their Q1 January earnings report and then peaked but right about there for about 4 months in a sideways trading range that was slowly cracking...making incremental new highs but all within a sideways trading range that was taking place while RSI was dripping lower on each incremental high. Eventually that gave way to the downside. Take a look below:
I can already hear everyone thinking that AAPL will just continue to run indefinitely. This is NEWB thinking. There isn't one historical instance where AAPL didn't eventually correct. Not Carl Ichan, Buffet, or any stock repurchase program has ever changed that. Don't make the mistake of thinking that this time is any different. Yes it's the largest scale rally that AAPL has ever put up with out a a correction but eventually this environment will either reach 1 of 2 things: A bearish cycle triggered by some kind exogenous event or the very classic "profit taking cycle." Just remember that there are other opportunity sellers on the other side of this trade that eventually will take profits. In fact many institutions & fund models have it pre-built into portfolio asset models to initiate sell orders on the basis of positions reaching maturity or having gains that exceed X.
Ok so that's all on watch. We believe that AAPL will crack sometime this month. It could happen as early as next week or late June but it's very likely around the corner. When that time comes it will be a bring a rewarding opportunity for a whole new call-spread for us to get into. Stay tuned.