And last but not least, let's look at AAPL which is really a separate asset class. Let me warn people right now who are trading AAPL based on the overall market or who are using AAPL as an indicator. There is absolutely positively no correlation right between AAPL and the market. I think AAPL could go to 750 with the ES correcting 10%. I'm dead serious. It's a totally different asset. This means you should NOT sell AAPL because you think the market is breaking down. Nor should you sell the market because you think AAPL is overbought and will fall and therefore take the market down with it. Let's look at the levels. AAPL is currently sitting right at it's monthly A up which is 637. This alone should tell you something. The ES has broken it's monthly A down and AAPL is at an all time high!!!!! Price action people, price action! The QTR A up in AAPL is 652.37. AAPL has blown through it's QTR A up levels for the last 4 QTR's. And I mean blown through them like they were not even there. With that level being so close I think it's given that AAPL will try to test it. However, there is no reason in the world to be shorting this name when there are so many stocks that won't even uptick when the Dow is up 500 pts. Those are the stocks you want to short, not AAPL. Along the same vein, let's look at PCLN. It also is making a monthly A up! That level is 749. So again, ES below monthly A down and PCLN above monthly A up. Do NOT short this! The QTR A up is 779. Good bet we test that level. Both these stocks will eventually trade through 1000. That's what strong stocks do. They take out big levels.
Lots of weakness in the energy space. If we confirm the monthly those would be the place to for some shorts imo. That move in bonds was something else...monday will be the real test since we are at so many key levels at this point and very early in the month!
Mav, as always, thank you for such an in-depth explanation into what you're seeing in the markets. Much appreciated!
Couldn't agree more. AAPL is in its own class, I also use it to provide income with bullish butterfly. Until it stops working I say heavy with this and roll-it over 45 days out. But like spreads, i am cautious about this working until it doesn't.
Been keeping a close eye on coffee futures since Mav posted his chart at the end of Q1, (both for a trade, and because I keep praying that I won't have to continue to purchase the good stuff at $14.00 a lb!). Still in quite the down trend, (though that said, just about everything will change heading into Monday off that jobs report). I have a confirmed yearly A down, (level in the ETF JO was 49.77). It should be able to run to about the 38 level, but another way to look at this would be the runs in SBUX and DNKN. DNKN is a relatively recent IPO, and has been the darling of some of the mo mo traders recently. There's a nice cup and handle there too for those who look at such things. Think those two companies will lower the price of a cup of joe in the face of lower prices on the commodity itself? Nope, probably not...
I've got a monthly A down at 138.78 in the SPY. Given the decent price action today in the indicies, (really, considering that jobs report was supposedly the end of the world) a close above that level today would be a sign that there's some life left in this 2012 rally. I had expected a test of 136 on the big gap down, but not yet. Watch your weekly levels as we move higher. After a close above that 138.78, a confirmed weekly A up would be the next productive sign.
Well, we didn't get that close above 138.78 did we? We'll see what happens from here, but we may still see that 136 level.
hey guys i recently finished reading the logical trader and have been using some of the principles in it with my trading method. i was wondering where everyone is getting their A and C values from? Is it obtained through subscription?
Hi Next, There's a decent point of reference here at the Logicaltrader.net: http://www.thelogicaltrader.net/qa.html Basically Fisher recommends 20-25% of the average 30 day range for stocks. He does provide his A and C values through the subscription service, (sign up for the free trial, there's a wealth of information there).