AAPL - 11/26/2012

AAPL finally filled the 574 gap made on Nov 7, 2012.  It has been up more than 86 points since it dropped to 505 on Nov 16, 2012.  One should not be surprise to see a minor pull back after such a quick and large recovery from its recent low.  Check out the video for details on some possible support and resistance levels to keep an eye on for the near term.



Click on this link to view the video if you do not see a video player on your screen.

AAPL - 11/16/2012

Today AAPL shows sign of capitulation and that could lead to a short term bounce.  Watch the video for more details.



Here is the link for the video.

Post Election Move

The US election is finally over and the market has returned to focus on the fiscal cliff and the Euro crisis.  Since the brief rally on election day, the DJI gave back 430 points (3.2%), the SP500 loss 48 points (3.3%), the Nasdaq 100 dropped nearly 97 points (3.6%), and the Russell 2000 loss more than 30 points (3.7%).  The week ended with all the indices closed below their 200 moving average.

Next week is another monthly options expiration week and expects increase volatility.  A dead cat bounce rally could appear before OpEx and this rally should not be bought until the market has clearly shown sign of a reversal.

Here are the charts for the market indices highlighting the possible resistance and support levels.

DJI

SP500

Nasdaq 100

Russell 2000

Pre-election Stock Play

As the US election is less than 2 days away, the market will likely be positioning for the probable election outcome. Depending on the election results, certain industries will benefit and others will not.

Here is a stock that is unlikely to be affected by the election results, Las Vegas Sands (LVS), a casino/leisure stock.

LVS appears to be forming a cup & handler pattern with a breakline near 47.60 and a measured move price target near 60. Watch the video for more details on the analysis.

Click here if you don't see a video player on your screen.



 Disclosure: Long on LVS

Trading With The Trend

To increase the probability of a successful trade, we need to know the current trend of the market and the stock (commodity, ETF, etc) we are planning to trade. If the market is in an uptrend, we should focus on long setups for the underlies that are in an uptrend, and when the market is in a downtrend, we should focus on short setups for going short on those underlies that are in a downtrend. If the trend for the market or the underlie is unclear, then we should move to the sideline until a trend can be identified.

On October 5, 2012, the market sent us a message that it has entered a downtrend by having the DJIA closed with a new non-confirm high and I posted this "We Need To Listen To What The Market Has To Say". In addition, on October 13, 2012, I posted an update on the market’s trend "Stock Market Review - 10/13/2012" when it reaffirms its direction. The market has definitely set off the alarm to inform us to tighten up our stop on the longs to protect our profits and preserve our capital. More importantly, it has alerted us to either move to cash or start focusing on short setups from the stocks (commodities, ETFs, etc) that are in a downtrend.

Here is an example of a downward trending stock, AMZN. In the first chart, AMZN price actions look very similar to the SP500 (SPX). It formed a double top, broken this price pattern’s supporting baseline on October 10, 2012, and closed below the 50 SMA (green) along with a declining 20 EMA (aqua).

The following chart shows AMZN established a downtrend by making a series of lower low/lower high.

Finally, the chart below shows the latest price actions re-affirm the downtrend by breaking the multi-month trendline, failed to move above previously broken support level, and formed another lower low that help define the downward price channel.

Until AMZN has reversed the current downtrend by breaking out of the downward price channel and made a series of higher low-higher high, one should look for short setups to go short after it has encountered resistance or broken support. When a stock is in a downtrend within a down market, the odd for a profitable counter trend trade is low. The odd for a successful trade is much better when we trade with the trend.

Disclosure: Long AMZN PUT