Daily Archives: March 5, 2013

How to Lose 93% in Five Easy Months

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One year ago, March 2012, people were flying to Los Angeles and gearing up for an investor conference dedicated to one and only one company: Apple. That's right; the entire conference wasn't just about trading stocks; it was about trading AAPL. (I was going to show you the site, but the URL now is dead and parked, although their Twitter feed – dormant for the past nine months – is still viewable).

It's kind of remarkable that so many indexes have made lifetime highs recently including, of course, the Dow 30 today, without Apple's participation. AAPL has fallen 40% from its peak, but in spite of this, the once-largest company in the world having this kind of collapse, the rest of the market has merrily churned higher.

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AAPL Low In? (by Strawberry Blonde)

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I wrote about AAPL and the AAPL:NDX ratio in my last Weekly Market Update.

At the time of writing this post just after noon on Tuesday, AAPL has rallied a bit today, as shown on this 5-Year Weekly chart, in conjunction with today's rally in the Major Indices (as I wrote about earlier at this link). However, it has done so without first testing it s major support level below at 400, so a bounce here may not be as strong a signal to indicate that AAPL's low has, in fact, been made, for now (although its low of 419 came close, so it may be close enough).

 

Today's bounce has occurred on a positive divergence of Momentum, as shown on the 10-day 10 minute ratio chart of AAPL:NDX below, as well as on positive MOM divergence, as shown on the 5-year Daily ratio chart below, to bring it back to just above major support.

We'll see if this major support holds, and whether AAPL can continue to rally…I'd like to see higher volumes enter on such a rally, however, to support such a move. Theoretically, we could see AAPL rally to a confluence level of the bottom of the channel and 2 Fibonacci retracement levels at 472ish (as shown on the Weekly chart of AAPL above).

AAPL is still not out of the woods yet, as it is still, technically, in downtrend on the Daily and Weekly timeframes. As I mentioned in my above referenced post, a failure of AAPL below its major support level of 400 could send it tumbling down to around 350, then 300. It's one to watch to see if it supports any further rally in the Major Indices.

 

 

Cushioning A Cliff Dive

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Not Reading Slope Can Be Expensive

Back on Tuesday, February 12th, our host Tim noted natural resources stocks were weakening and suggested shorting Cliffs Natural Resources (CLF).

The next day, Cliffs dived 20% after announcing a cut in its dividend after the close on Tuesday.

From A Mess To The Masses

The old Odd Lot Theory was based on a simple premise: the average, small investor (those who couldn't afford round lots of shares) was usually wrong. Guess which stock Fidelity customers were buying with both hands as it dropped 20% on February 13th?

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Mass Media Dowgasm

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As I’ve been saying on a daily basis lately, breaking the old high of the Dow was the big, looming goal of TPTB and the MSM, and voila, they’ve done it. Naturally, the likes of Cramer are jizzing all over the airwaves right now, and any glance at CNBC.com or MarketWatch.com or any similar site shows gigantic headlines about The Big News.

0305-indu

 

Bernanke (and his albino helpmate Yellen) must be feeling awfully good about life right now.