Thursday 25 October 2012

Apple Fell From Tree.

Story of the night is the earning miss by Apple. And the cherry on the top is the disappointing results by Amazon. SPX futures (/ES) again tested 1400 after hours and Nasdaq futures (/NQ) tested 2600. Both bounced back from the lows but we have to wait and see the action overnight.

Trading of Apple shares were halted in the after-market when it traded below $600. But the market was not expecting anything great from these two, if I have got the pulse correctly. Right at the point of writing this post Apple was trading at $ 607. There was no dumping as such.

I wrote in the past that once Apple closed below $640, it had more to fall. I think we will not see a trade-able bottom for Apple before the end of the year. This is consistent with my view of the general market. For now, despite the disappointing results, it is poised for a bounce soon. So are the futures.

Today the markets messed up with both the bulls and bears and end of the day both group were confused as hell. The short term cycles are all mixed up and it is going to be a messy bottom in a day or two.  

These days I look at 4 hour chart to get a little bigger picture. The 4 hour chart of /ES is showing 4/5 touches around 1400 level and bounce from there. Obviously this is an important support. As time passes and bears are unable to convincingly break this support, it becomes stronger. Having said that, market always surprises and inflicts maximum pain on maximum number of people. If folks did buy more puts of Apple, we can be sure that Apple will close higher. As per option pain calculator, November Max.pain for Apple is $ 635, which is higher than where it is now. Go figure.

I still think a short term bottom is around the corner. Let us see what the overnight actions and tomorrow bring. And I am still waiting to see whether Nat.Gas gives the sell signal. Today it broke below $3.40 but closed above that line. If there is no sell signal in a day or two, then it will be time to pile on to Nat.Gas.

Sentiments have turned south for gold and silver. Today one newsletter writer bailed out of gold and that may be a good contrarian indicator. My take is that we will see a re-test of the last high by mid-November and if the re-test fails, then we bail out and re-enter by end of the year.

That’s all for tonight. I made some changes in the Ad program. Now we only have Amazon link at the top and no other Ads except the in-line text ads. Hope you will remember the blog if and when you use Amazon.

Thanks for sharing my thoughts. Patience is required for few more days.


  1. Thank you for sharing your thoughts!!!
    I find myself agreeing with you BB. We are kind of getting used to bad news rallys, perhaps they just come at cycle turns coincidentally. The media isn't that smart even with planned spin.

  2. Futures are down quite a bit, S&P futures below 1400. Should coincide with your cycle bottom at end of month.

    1. It is the close which matters. let us see where it closes. I am not so worried about /ES and waiting to see if Nat. Gas gives sell signal.

  3. any logic behind AMZN being UP after yesterdays NEGATIVE earnings and big miss? kind of absurd and makes me fearful of trading stocks at all. I mean it has a 300 PE or something where as AAPL has better financial health and growth while sporting a PE of like 13ish?!? Strange Strange Market. Interesting to see what election will bring

    1. You are right. There is no logic and that's why I follow cycles. Cycles tell me that Apple is down till December.

  4. BB, wondering whether your could give us some ideas what your cycles (e.g. on AAPL stock) are based on (combination of technical indicators, timeframes, fundamentals, etc...). Thanks!

  5. I've been out of town on personal business for most of the past 2 weeks and mostly away from the computer. Sorry to hear about the loss of ad revenue.

    I know virtually nothing about cycles. It seems to be one of your major indicators. I would appreciate an article on how you derive them.