Friday, March 2, 2012

AAPL - my favorite SHORT candidate + Markets at critical juncture

Calling tops is an ego play anyway I had this feeling we are at a critical juncture here and wanted to post a reminder and make a check on the broader picture and especially this, favorite to the whole world, super cool stock AAPL.

Everybody loves Apple and everybody wants or already has iPhone / iPad / iPod / Apple TV and whatever this company produces. Checked the current P/E is 15 on BBG and it looks cheap. Anyway I like that everybody thinks it is a great company.

Short float is only 1.14% which is great - don't like much company in the boat for now.. All analysts rate it Buy/Out/Overperform. So the whole world likes it and most probably has it.

So what happens when everybody has it? There is nobody to buy and the price drops 15% in a day. 

I don't care when. I assume it might have a spike to 580/600 area which will develop into a Blow-off top and then there will be fun times for the shorts which I will be in.

AAPL - Weekly chart has that super Bullish 8 last candles closing outside the Bollinger Bands and Volume supports the Trend. So I will wait for a close inside the BBands and a Blow-off top / Island reversal as a sign.

AAPL >  Daily chart  has all the Technical Indicators I use in an overextended mode. They only lack a Reversal sequence of a 3-5 days to turn down and signal the Top.

Russell 2000 Small Caps have been the out-performers in the last 2 years so once I see weakening here I assume we have to fold, go Short and Hold. Weekly chart has the price action already inside the BBands, and the rally stalling in front of the May & August 2011 Highs.

Russell 2000 Daily chartshows clearly the encapsulation of the price inside a tight range which I assume as Distribution phase of the current 3 month rally. BBands has narrowed a lot which means congestion.

I believe when markets reach an important levels like 13 000 Dow they would like to pause and go back for a happy retreat. It's that simple.

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