Apple has had the luxury of great news flow forever. New and improved products are always coming and it seems that with every announcement (or just the rumor of it) the stocks trades higher. $AAPL has been in a news vacuum since it reported earnings a short while back. That coupled with a brutal market has resulted in about a 100 point drop.

The planet was watching theta 550-555 level as support and it broke like a hot knife through butter yesterday. Einhorn mentioned that he though $AAPL deserved a higher multiple at about 3:30 PM yesterday, the stock bounced off the lows, but then erased that gain in the after market.

Bloomberg just reported that hedge funds accounted for one third of all the selling in $AAPL stock in the first quarter. So what’s up next for AAPL in terms of an “event”?

China Mobile $CHL may soon offer the iPhone. The chairman of China Mobile has confirmed this. This isn’t breaking news, but it will be interesting to see how the stock reacts if a deal gets done.

Compatibility issues between the iPhone and China Mobile’s 3G network mean that currently Apple’s handsets only work on the much slower 2G service.

The problem could be resolved with the launch of the next iPhone, rumored to happen this summer, and when China adopts the 4G standard.

Catalyst needed.

Tonight I looked at names like $HD, $AAPL, $PCLN, and $APC. The list is endless, but that is a sampling of names that I wish I had hit short. Most of those names I had an opinion on and wanted to short, but for whatever reason I never pulled the trigger. Some I shorted for a day trade, but nothing meaningful.

There is a modicum of “top calling” (or wishing) when you do this, I don’t try to do either, but it does put that sector or stock right in the bulls eye of my radar. There is nothing wrong with anticipating an outcome as long as it’s backed up with some work. As traders, we anticipate outcomes with every trade.

I study several hundred stocks a night, as well s ETF’s and I am now watching $IBB (iShares Biotech Index) with interest as a potential short set up. I like this set up because I know my risk reward and it fairly well defined.I haven’t entered this short yet, but I will watching tomorrow and Friday.

The top 10 holdings in IBB are: $ALXN, $AMGN, $REGN, $CELG, $GILD, $BIIB, $TEVA, $PRGO, $VRTX and $MYL.

I have reviewed all of those 10 stocks on their respective charts, A few are strong a few have been smacked pretty good and a few look toppy to me, so basically a mixed bag of nuts.

As I always say, some charts look like Picassos until they don’t and IBB has frankly acted better in this tape then I thought it would.  Maybe this wont validate to the downside, but I am watching. The hourly MACD has crossed lower and now I am waiting for the daily to confirm. Current market conditions also drew me to this. The tape is overdue for a bounce, so this idea may become a non event, but it’s one to keep an eye on.

If I go short my stop will probably be placed at the 127-128 level.

IBB

Will we rip, dip, have a Troika Tuesday or a Turnaround Tuesday?

The hilarity has returned in full force as we hang on every lie, whisper and unsourced comment from the gang across the pond.  The market bounced around today on more “yes they did oh no they di’int?” nonsense.  The new socialist party were big babies and threatened to hold their breath if they didn’t get there way this weekend and the folks at the neo- nazi party  burned drachma’s for Mother’s Day. It was a tough day and the market tanked.

Wonderkid Jamie (I’m just like everyone  else now) Dimon screwed the pooch last week with a big loss, and today he had some chick fall on her sword for him. Someone had to go. The loss is a rounding error in terms of financial impact and magnitude, but the media loves a good story. The fact is there is so much toxic shit out there we will probably never know the extent of it until it’s too late. But you already know that.

China eased reserve requirements, but that didn’t do diddly squat.

It’s option expiration week and “typically” that has been decent for the tape, even though weekly MACD’s are breaking down just about everywhere and the Russell 2000 is hanging on the neckline of a big ass head and shoulder pattern. Not all H&S patterns break, so therefore they don’t all validate and get crushed to pixie dust. But it does makes for great conversation on the cocktail party circuit. Kind of like that big head and shoulder pattern on the S&P a while back that ended up just ripping higher and squeezing shorts in the process.

$AAPL looks and feels bad right now. Bulls will want $550 to hold, bears will want that level to break. That’s what makes a market.

The financials $XLF are in the wood chipper again, thanks to $JPM and the daily chart looks broken for now.

Coal got hammered today and I guess you all know by now that we never ever use this black rock again, we will never use oil again or a hunk of steel for that matter. Soft commodities are getting hit, so I can only assume that none of us will ever eat again. At least that was the “chatter” on The Street today. The internet was a fad, so undoubtedly  all technology stocks will  be sold down to a drill bit. You will buy $AAPL again at 10.

All sarcasm aside ,this is what I wrote to subscribers last night and I do believe we are ready to go hard either way. The $SPX is about 80 handles off recent highs, so a strong case can be made for an oversold rally. The S&P lost support today by a couple of points and that isn’t a big deal yet. Problem is no one wants to be really long overnight (or short) for fear of leaning the wrong way and getting their eyelashes ripped out. Uncertainty is back and risk is off, for now.

I hope they take it down at the open so I can be a buyer, but whenever I ask for that small favor it never happens. Patient with cash here. The tape sucks.

$FB prices on Thursday and options expire on Friday. No shortage of excitement.

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The S&P is back in the box again, we talked about this months back as the market chopped around within the confines of the box before it ultimately decided to breakout higher.

We are now at the bottom area of the box which is also the support area. That level is around the 1340 level. This level is on everyone’s screens and because of that it is important. If it fails this level, then look for 1300-1320, (maybe even 1275) to the downside. Conversely, this is 1340 area is support and could easily hold.

There was news over the weekend that China eased reserve requirements for their banks, so that is bullish. There was also some chatter out of Greece that they may honor the original bailout terms. Again this is “chatter”, and as we all know by now, nothing is to be believed from the other side of the pond. If it’s true though, this will also be good for the market.

Earnings are pretty much over and for that I’m glad because I hate trading during that period. Too much whip and chop for me.

The best acting sectors right now natural gas, utilities and big biotech.

Natural Gas

IBB  Big Biotech Names

Biotechnology

Utilities

Utilities

That’s a mixed bag which makes figuring out the next market move more difficult. The financials are currently wounded after the JPM fail, so that group could be difficult to trade over the short term. Regional names are still the safest in the financial sector.

So far buying the dip has worked and 1340 may prove to be a short term bottom for this tape, but I am seeing some technical weakness that I haven’t seen lately as it relates to the weekly charts. Some of the MACD readings are breaking down on the weekly time frames and that could lead to lower prices. It has before. You can see this in QQQ SPY SPX NDX RUT, DOW etc… The Russell 2000 also has a glaring head and shoulders pattern which may or may not validate.

As a result, I am sitting on my hands for a couple of days. I will also probably be in daytrade mode for a few days, so stop by the chat room if you are so inclined.

See you all in the morning.

$AAPL held and bounced

$XLF held and bounced

$XLE held and bounced

$XME broke but held the trendline

$XLK overthrew, but held the trendline

$XLB held the trendline

It’s all fun and games until someone gets a stick in the eye, but the ETF’s that I watch held today. We’ll see if we have a turn around Tuesday tomorrow, The powers that be had a chance to make their statement to the downside today, they did not though because right now they are wussies.

Most of these names ‘BARELY” held, but they did hold, so your money your call.

Long $TQQQ $TNA $FAS and other assorted steroid longs.

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This tape isn’t for beginners.

The jobs number wasn’t good and we were fresh off some tepid (at best) economic reports. Europe sort of ruled the week, as the markets got all twisted about the Sarkozy election this weekend.  The market was looking for a reason to let some air out, and it did.

$AAPL is falling apart, but the volume last week was still below the 50 day moving average. It also managed to close at some trend line support as you can see below. It also managed to go back and fill the earnings day gap on Friday. If it doesn’t holdhere, then your next probable level is the 550 area.

AAPL

I’m back to looking at my trend lines for now. When markets hit lofty levels and then turn on a dime like we saw on Friday, I find them more telling and dependable than moving averages. As I opined here a while back.

Everyone wants to know (including me) if this is the start of a disaster for the market or just another gift to buy “stuff” cheaper. I don’t have the answer, but watching your trendlines (use your daily AND weekly charts) will help. So far, every dip has been a buy, but that trade only works well until it doesn’t.

Here are some sectors that need to be watched like a hawk next week. Many times, stocks and sectors will “overshoot” their trendine support levels by a little then rip higher, so keep that in mind. Most of these sectors are at key levels, so a break of these levels with big volume could become a worry. These are also levels where they could bounce to the upside in a violent fashion. These are merely my observations and not my predictions. Good luck next week.

$XLF

Financials

$XLE

XLE

$XME

Metals & Mining

$XLK

Technology

$XLB

Materials

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