Members Update: $AAPL Panic Coming. Welcome It



BotTrigger Trade Update: $BABA $TSLA $AAPL we're going to hold off on our $BABA call spread for now. The lack of follow up from yesterdays bull bar & coupling decline of several leaders like TSLA AAPL & the broader market indexes suggest we're not done with this pullback. There will likely be a better entry on BABA at lower prices. Good for us. TSLA also is another one that we'll get back into we believe much lower from where it is now. We need confirmation for a reversal before that happens. We'll outline in a separate post where the next likely support zones are, notably in the $280 area. Turning to Apple, the daily chart clearly now indicates that Apple is setting up for a big sell-off. At least that's what the chart is suggesting right now. This consolidation is pretty significant and it points toward a sell-off down to the mid to low $130's. Hopefully it happens sooner rather than later. But the consolidation suggests this. Apple has now consolidated for 18-trading sessions after falling $14 from $156.65 down to $142.51. After that two-day heavy sell-off, the stock has essentially traded between $147 and $142 a share forming a pretty significant bearish consolidation. What should normally happen is that once this unwinds, the sell-off should be quick and fierce. We should see the same type of selling we're seeing in Tesla this week for example. Apple should fall something like 4% a day for 1-2 sessions in a row. That's how this typically transpires.

When you look at this chart above you can see that the second leg down is very comparable to the first. And it really wouldn't be surprising and not outside any realm of reason to expect the sell-off to happen like this in two sessions. It could very well happen and the set-up we have right now opens up that very real possibility. And the fact that this consolidation has been going on for 18-sessions now makes it a very real possibility any day now. What could spark that type of selling is impatience. Think about it. Suppose one bought Apple at $135 a share. They've seen the stock rise to $156, didn't sell and now the stock is only $7.00 above where they bought it. If Apple starts to decline toward $140, it could cause a lot of impatience by those holding smaller margins of profit. And when you're seeing stocks like Tesla take a huge hit like this, it makes the market place pretty nervous. So we could see something like this starting tomorrow morning or Monday morning. Apple could easily fall from $143 down to $134 in two trading days. It could be sitting at $130 in three days. At $130 a share, Apple will have fallen a total of 17%. That has seemingly been the typical sell-off in both the financials and with some tech stocks. Tesla is already down 18% in just a few days. So for now we just sort of have to wait it out. Again this will happen fast when it does: the consolidation has lasted for 18-days and all it will take is 2-3 sessions for Apple to fall to the low $130's. If Apple breaks down it's not going to be a situation where it will take weeks to get down to the low $130's. It will happen fairly quickly.

We want to take our next call spread during the peak of that dramatic frenzy. That's when premiums will be most affected. What we'll likely do is buy both a near term spread that expires in December to January and then a more conservative spread that expires in June. The quicker, shorter spread will add fuel to our gains fast when the trend shifts back towards the upside. AAPL will have a whole new wave of bullish sentiment come back into the stock that will take this back to retest the highs. This bearish period will not last for the remainder of the year I assure you. Give this time to setup.

When we do see the mid to low $130s you'll really appreciate being in the January $110/$120 call spread. That and having the ability to buy another fantastic spread. We may look at something very boring like the December $120/$130 call spread @ $5. Right now that call spread is trading @ $8.03. This spread will move very fast once the bull force comes back into AAPL. BTW, none of the above mentioned should mean that we are endorsing selling our existing Jan AAPL spread. That spread is a keeper and we will most assuredly get to sell that at max value if not much much higher in the mid $9s.

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Some of the greatest pearls shared by Jesse Livermore:

“Money is made by sitting, not trading.”

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

“Buy right, sit tight.”

“Nobody can catch all the fluctuations.”

“There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

“It takes time to make money.”

“Don’t give me timing, give me time.”