UPDATE:  EOD

NDX is still stuck at the apex of its rising wedge.  Looks very vulnerable here, with an RSI TL tag and MACD rolling over to boot.

A lot has been written about AAPL, and its ability to bounce back above its recent highs.  Remember, we saw its reversal coming a mile (well, 36 points) away [see Feb 11: More Crabapples.]

The stock had poked up above a trend line that extended back to 1994 (log scale), was neck deep in a rising wedge and was flashing very strong negative divergence.

Best of all, it was completing a Crab within a Crab pattern – one of my favorite short setups.  Here’s the chart from Feb 11 showing the trend line that, if broken, would result in a Crab completion at 529.

The rest, as they say, is history.  AAPL got within 3 points of our target, then fell 40 points to 486 — leaving a very bearish looking topping candle in its wake.

Since then, it’s retraced about 78.6 of its losses; and, most financial writers are calling for new highs.  While anything’s possible for this amazing company, there’s still a good case for further declines.

For one, rising wedges like touches on both boundaries — and the lower bound is down there around 415 feeling very neglected.  Second, Crab patterns are wont to retrace .618 of their XA moves, which in this case would be to around 426.  And, last, AAPL is running into trouble with respect to its RSI chart.

Tags on the yellow and the red RSI trend lines have marked some pretty significant sell offs.  While 40 points is nothing to sneeze at, it doesn’t compare percentage-wise to some previous tags (e.g. 12.6% in July 2011, 9.5% in Sep 2011, 16.1% in Oct 2011 and 27% in Apr 2010.)

The yellow TL, in particular, exhibits some pretty massive negative divergence.   Back in October 09, when that TL originated, AAPL was hovering around $200/share. 

On the hourly chart, AAPL appears to be back testing the yellow, dashed RSI trend line.  Unless the bottom falls out, it will likely complete a little Bat pattern — tagging the .886 Fib at 521.77 at about the same time it runs into overhead resistance from that red, dashed TL.

From there, we could see a continued decline to the lower bound of the rising wedge for a 15-20% decline from recent highs — a plunge that would likely accompany (if not precipitate) a general market decline.

Stay iTuned.

8:15 PM: This just in…check out the interesting post over at Zerohedge re the largest hedge fund holdings.  AAPL comes in as the most crowded trade in the bunch. 

UPDATE:  12:30 PM

Right on schedule, the bounce we talked about a bit ago (1355.53 vs 1355.87, oh well…)

The 60-min RSI has tagged a trend line that could resist any further downside.  Decision time.

The daily chart RSI shows the back test of the previously broken trend line (in yellow) and the establishment of a new line (red) we need to break in order to confirm a downward break of the corresponding rising wedge.

Note:  got stopped out on my remaining gold short position (for roughly a break-even) since prices have moved beyond the back test of the recently broken channel.   I’m looking at 1800 as a likely re-entry point.

1802.70 is the 1.618 of the developing Crab pattern and should result in another touch of the fan line that brought the last reversal.  I’ll be especially interested if we see negative divergence continue to develop on the 60-min chart.

SBUX is rallying after a nice 5-day sell off from its rising wedge break.  Judging from the 60-min RSI, it should reverse here and resume its decline.  My target is 47.40, or a tag of the lower RSI TL, whichever comes first.

I still have half my original position left, and will let it ride unless we break the downward sloping TL on the RSI — probably around 48.35.

I’ve been tempted to blow out MSFT shorts, but until it can break the Apr 23 2010 high (31.58) and/or overcome the neg divergence, I’ll hang in there.

It hit 31.68 intra-day today, but reversed off that to close down .54% at 31.27 — so far, a triple top that’s failed to keep up with S&P; 500 or NDX.

Among other high-flyers, GOOG is tracing out a H&S; pattern in the wee small hours of its rising wedge.  A break below 565 could see it revisit its June 2011 lows of 480.

ORIGINAL POST:   11:00 AM

Don’t you just love waiting?  After a prolonged melt up like we’ve had the past two months (feels like six), we’re all more than ready for a turn.  Even the bulls are getting antsy.

As we discussed yesterday, there are multiple risks to the bull case immediately overhead.  In the meantime, we completed a little Crab pattern on Monday that should see SPX back down to 1348 or so (.618 of the XA distance.)   But, watch out for at least a pause at 1355.87 — the wedge lower boundary and horizontal support off the Feb 15 high.  Depending on selling volume, the decline could reverse there and go on to tackle some of the overhead targets.

A decline to 1348 would be significant in itself, but of more significance is that it’ll take SPX below the rising wedge that’s formed over the past three months.  This wedge has been broken before, and has handled it by widening the original path.  Since it’s been about as trustworthy as a central banker, we’ll watch this one very carefully.

More later.

UPDATE:  1:50 PM

SPX faces a gauntlet of overhead challenges, seen here on the 60-min chart:

Previous High:             1370.58
Inverse H&S;:               1372.00
Butterfly 1.618:            1375.47
Gartley (2007) .786:     1381.50
Rising Wedge Apex:    1392.23

RUT Bat and Crab pattern highs continue to hold.

NDX, like just about every other index, spent the past few days churning.  Its RSI, also like just about everything else I’m watching, is back testing a broken trend line and is beginning to show negative divergence on the daily chart.

ORIGINAL POST:

At long last, the Greek deal is done.  But, there’s lots of hair on the deal, and the market is rightly unimpressed with the futures up a mere 3 points at this writing.

The melt up has the potential to tack on another 12 points in the eminis — with a 1376.85 Butterfly pattern completion up ahead.  This is a smidge higher than the May 1373.50 high, so it has the ability to rewrite a lot of Elliott Wave history.

It also roughly coincides with the most generous rising wedge I can draw — not to mention the inverse H&S; pattern.  First, the big picture:

And, a little closer look:

The rising wedge formed with the fan line from Mar 09 is obvious (though I never thought it would grow to include the Oct 27 aberration.)  It also has a lot of open space near its upper bound, making it look a bit hinky.

Drawing a tighter upper bound (purple line) looks a little better, but it also looks a little less ominous.  So, pick your poison.  I think the Butterfly will spell a reversal, especially given that it’s in such close proximity to the previous high.

Just like SPX, the eminis didn’t quite reach their Gartley target at the .786 Fib level of 1389.66 back in May.  If, for whatever reason, we should overshoot the double top at 1373.5 or the Butterfly at 1376.85, then the original Gartley level should produce a strong reversal.

  
The corresponding values for SPX are shown in the chart below:

Note that they’re a little more compressed in SPX, and that we’re already within striking distance of any of the three — close enough, in fact, that this rally could fizzle at any time. 

Go back and study 2007.  Remember the 90’s bull market finally topped out at 1552.87 in March of 2000.  And, though there were plenty of reasons for the market not to make it back there after plunging to 768, by October 2007 it came back to 1576.09 — 23 points higher than in 2000.

Then, as now, the majority of analysts saw besting the old high as a clear sign of higher prices to come.  Of course, we ended up with a lower low, shedding 58% in the next 17 months.

What I’m trying to say is, the bear case is not dashed if we exceed 1370.  We have two other very strong causes for a reversal waiting in the wings.  And, the commonly accepted EW count can be dead wrong without it meaning we should ignore the crumbling global economic picture, not to mention all these bearish chart patterns, and suddenly turn bullish.

More later.

Just came across this fascinating quote over at Zerohedge.  It speaks volumes.  The most chilling part is the last five words of the attribution.

“Whoever controls the volume of money in our country is absolute master of all industry and commerce…and when you realize that the entire system is very easily controlled, one way or another, by few powerful men at the top, you will not have to be told how periods of inflation and depression originate.” – President James Garfield, two weeks before his assassination.

Still traveling, so this will be brief.

Yesterday’s action has shaken the faith of lots of bears, exactly what you would expect under the circumstances.  Despite the fact that SPX set a new high and is closing in on 1370, the push has been on narrow leadership and weak volume.

My premise is that the situation in Europe is not going well and, since we’re talking countries rather than companies, this will end worse than Bear Stearns/Lehman/AIG.  I don’t see anything on the horizon that will “fix” the problem, although resolution could be delayed if the EZ possessed the political will/unity to do so. For that contingency, I maintain stops at a reasonable level.

I believe EURUSD has completed a nice back test of a big-ass H&S; pattern that just so happens to target 1.12 — the bottom of the flag pattern that’s been tracing out for the past 4 years.   I think the next move down will be very significant, probably skipping a channel or two on its way down.

There’s a little H&S; pattern that’s set up over the past three weeks that’ll start the ball rolling with a break below 1.30.

The dollar fell yesterday, but it felt more corrective than impulsive.  We’ve made a series of higher highs and higher lows since our Feb 7 call for a turn — despite the fact that SPX hasn’t cooperated in the least.   I haven’t touched the chart from back then, because the fan lines continue to do their thing.

Could anything go wrong?  Sure.  Note that the yellow dashed fan line that provided the last turn could also serve as a nifty neckline for a H&S; topping pattern.  If prices touch that line, I’ll give up my bullish position and let the dust settle.  But, for now, I’m still looking at a target around 87+ — the top of the flag pattern.  It will correspond with a powerful equities dump.

I was stopped out of my VIX calls yesterday, but have jumped back in at a lower price.  Looking at the chart, we’ve made a lower right shoulder on the IH&S; pattern.  Until it moves lower than the head, it’s still intact.  Today’s low makes for a very convincing back test — without even re-entering the falling wedge.

XLF hasn’t participated in SPX’s new high, completing a goofy Gartley with a back test at the .786 of its recent slide.  I added to my bearish position there.  Likewise with Starbucks, which completed its own rising wedge back test with a Gartley pattern at a .786 retrace.

Gold continues to move sideways after leaving the upward sloping channel the other day.  I think it’s tracing out a flag that should see it back below 1700 in the next few days.

And, last, because I have to dash…  SPX just completed another Crab pattern at its high for the day.

SPX is still backtesting its rising wedge — just at a higher price (which none of my other positions did, BTW; nor did AAPL.)

But the thing that kept me from blowing out of the position yesterday was the fact that its RSI never regained its trend line.  For now, it’s simply a back test of a rather meaningful trend line.

I won’t be able to post again until tomorrow, as I’ll be attending a friend’s funeral and wake this afternoon.  I wish you all good luck.

ORIGINAL POST:  2:30 AM

I’m traveling over the balance of the week, so posts will be a bit spotty.

After bouncing around quite a bit, SPX ended the day on a solid down note.  We closed below the rising wedge, but not quite enough to put a fork in Wave 2 just yet.  I’m looking for a close below 1340 (Tuesday’s low) for starters.

Ideally, we’ll see a bounce up to 1350 to back test the wedge and complete a small H&S; pattern before heading south.  Given that Friday is OPEX, I think it’s actually fairly likely — unless we have the massive sell-off that’s entirely possible with a market that’s this far stretched on the upside.

Daily RSI broke its trend line, and has a ways to go before finding support.  My gut tells me 1355.87 was the Wave 2 top, so I’ve added some short positions.  I’m long puts on SPY (tight stops), SBUX, AAPL, XLF and MSFT and calls on VIX on the IHS completion.

I’m also long the dollar and short the euro and gold.  I’m expecting the euro situation to worsen over the next few days, and at least a .05 move in EURUSD in near term.  Look at the past patterns and you can get an idea what can happen when EURUSD jumps channels.

Weekly

Daily

AAPL came very close to our 529 target and reversed hard.  At 19% of the NDX, it should take the rest of the tech sector with it.   MSFT completed a well-defined Crab a few days ago, and is reversing nicely now.

Gold continues to come under pressure, although prices have been choppy.  I expect it to sell off with the rest of the market next week, if not sooner; but, I’d bail at a move over 1765.

I’ll add to positions if/when the downside gets going, but am the equivalent of about 40% net short, with options comprising about half of that. 

One thing I’m considering doing on the new website is posting actual trades in a model portfolio.  If this interests you, let me know.   The only tricky aspect is putting on trades that the average investor would feel comfortable following: ETF’s, long puts and calls, spreads, straddles (nothing fancy).  I would stay away from futures and most individual stock names.  Please give me your thoughts.

Good luck to all.

UPDATE:  3:30 PM

Revised H&S; picture for SPX.  Whether this holds or not, we’ve clearly broken down below the rising wedge.  The trick will be to close below it and, specifically, below yesterday’s low of 1340.83.

UPDATE:  2:15 PM

VIX just completed the IH&S; pattern we’ve been watching for several weeks.  The nominal target is 25.85 — more than enough to feed the next biggest pattern up the food chain.  This, in turn, will feed a bigger pattern, etc.  See the big picture repercussions here. 

This should get things going for SPX, currently off 4.64.  If we close below 1340 today, 1355.87 will look like the Wave 2 top.   It’s 2.02 above the 1.618 extension on our latest Butterfly pattern (from 1333 to 1300) and is a remarkable 95.03 retracement of the 1370 – 1074 decline.

UPDATE:  1:00 PM

Looks like a beautiful shorting opportunity in Starbucks (SBUX.)  I can’t resist the Mar 46 puts at .42.

UPDATE:  11:45 AM

AAPL off to the races again today.  A reminder, 529.25 is the 2.618 extension on the big Crab pattern we’ve been watching [see: More Crabapples].  We’re also in nosebleed territory, having poked up through the trend line that dates back to 1994.  Look for a serious reversal, maybe enough to mark the top.

UPDATE:  11:00 AM

Well, that has to be one of the weirdest openings I can remember.  The futures were fading fast as the opening bell approached.  The cash market had little to no momentum at all, having reversed off the Butterfly pattern I discussed in the prior post.  It fell from 1358 to 1350.75 from 7:30 to 8:15, feeling trés motive, BTW.

We saw a 50% retrace back to 1354 from 8:15 to 9:13; then, another motivey plunge got going.  As 9:30 approached, the eminis were at 1350.75 — well below the head of our H&S; pattern — and heading south fast.  With any luck, the pattern would be left intact and we could get started wrapping up Wave 2.  If only life were that simple.

The cash market opened and market makers, recognizing the huge shooting star being formed in SPX, freaked out.  Not being the types to let a bearish pattern stand — especially with OPEX coming up in two days —  they threw everything including the kitchen sink into the market.  

They ramped.  What should have been a down or flat opening (futures were at 1350.75, versus yesterday’s cash close of 1350.34) and pumped it up to 1354.72 — 40 cents higher than the previous close and perfectly good H&S; head.

Does it kill the H&S; pattern?  Yep.  It certainly sows seeds of doubt into the EW count, since we now have a higher high — scam turd though it may be.   If nothing else, it extends Wave 2 another hour/day/week until something too big to sweep under the rug comes along.

I almost forgot to mention…the news snippet that upset the bulls’ apple cart last night.  Among other things, it appears that TPTB across the pond aren’t so sure that the conditions they set for bailing out Greece were enough.  They’re “mulling whether to delay a full bailout package for the country [Greece] until after the country’s elections.”  In other words, they want the pledges of the currently elected officials and those who haven’t yet been appointed elected.

This is the EU version of demanding another shrubbery.  Demands to cut down the mightiest tree in the forest with a herring are sure to follow.

Right on cue, we get this priceless quote from Greek President Papoulias, who “tore into Germany’s finance minister, the Netherlands and Finland for taunting the country’s troubled recovery efforts as Athens fights to stay in the euro zone and avert default.”

I do not accept having my country taunted by Mr Schaeuble, as a Greek I do not accept it….Who is Mr Schaeuble to taunt Greece?  Who are the Dutch?  Who are the Finns?”

According to unnamed sources, Mr Schaeuble became quite agitated at Mr Papoulias’ reaction.  At great personal expense, I have obtained this secret footage of the exchange.

ORIGINAL POST:  2:30 AM

I posted the other day about the rising wedge on SPX and, specifically the eminis, commenting: “it has to break down or break out…something’s gotta give.”  Well, how about a break down and break out?

SPX broke below its rising wedge today.  Shortly before the close, it back tested the wedge, looking weak as it did so.  Then came the spike.  Apparently someone leaked the news that the Chinese had decided they could solve the world’s financial problems (or, at least Europe’s) and SPX spiked almost 10 points in a jiffy.

By the time the news was actually released several hours later, the eminis had spiked another 11 points.  As I write this, they have rallied so far as to complete a little Butterfly pattern at the 1.272 extension at 1355.75, so don’t be surprised if the whole thing reverses back to GO.

Looking at the cash market, the level at which we open matters a lot.  If we exceed 1354.32, the H&S; pattern craps out — not the end of the world for bears, but it changes the count a bit.   Many EW practitioners have been calling for a slightly higher 5th wave to end Minor 2.  As long as we stay below 1370, all is well in Elliott World.

BTW, we’re seeing the same kind of divergence we saw 24 hours ago — with equities up much more than the corresponding anemic bump in EUR and AUD.  Don’t you suppose that if the euro problems were solved, we’d see more of a reaction in the currency than in US equities rather than less?  Just saying…

Stay tuned.

Retail Sales

As usual, the economic headlines from MSM are wrong — focusing on the 0.4% seasonally adjusted increase rather than the actual 21% decrease from $459.8 in December to $361.4 billion in January.  Wait, you say, you can’t compare January and December, with all that holiday shopping included!  That’s true, an adjustment is appropriate — just not the adjustment Census packed in there.

UPDATE:  1:25 PM

VIX is coming to life, again.  We had a breakout of the small falling wedge inside the large falling wedge, then a breakout of the large falling wedge itself.  It was followed by a successful back test.

A rise to 21.13 or so will complete an Inverse Head & Shoulder pattern that targets 25+.

A corresponding drop in SPX to 1339 will complete the bearish (for stocks) H&S; pattern there.

UPDATE:  12:40 PM

For anyone following the USDJPY, we’ve seen a pretty strong move today – rising above the SMA 200.  But, a genuine break out will take some doing.  On a log scale, the purple TL/channel guiding prices since 2007 is still intact.   Most troubling for the bullish case is the RSI, which looks to be tagging a TL that’s not been very accommodative.

USDJPY Weekly

Look for a rise through the purple TL, currently 78.54.   A rise above the Oct 31 high of 79.52 would constitute a more bullish wave form.

USDJPY Daily

And, just for grins…

UPDATE:  10:15 AM

AAPL taking a pause right at the 2.24 Fib level we talked about over the weekend.  Note that 2.24 is an acceptable Crab target (1.618, 2.24, 2.618, etc.)  This also intersects with the trend line from 1994 we discussed over the weekend [see: More Crabapples].

Anyone playing the downside from here, however, would be well advised to place prudent stops; the next significant Fib level is way up at 529.

UPDATE:  9:15 AM

Eminis flashing -5 at this time.  SPX will need to trade below 1339 (10 SMA) to confirm the change in momentum and complete the first Head & Shoulders pattern, while 1343 would take prices below the rising wedge.  

ORIGINAL POST:  8:45 AM

EURUSD has broken down from the rising wedge it’s been tracing out (since the first of the year) and completed a successful back test.   It bounced off the SMA 20 last night, having broken through the SMA 10 yesterday.  Further, the EMA 3 crossed below the SMA 10 with the rising wedge break.

I always label my moving averages the same — just to make it easier to keep track of them on busy charts:

3 EMA:  yellow
10 SMA:  red
20 SMA: white
50 SMA: blue
200 SMA:  thicker red

More later.

UPDATE:  9:30 PM

In the 12:15 post earlier, I discussed the two possible harmonic paths for EURUSD.  The path higher has been all but eliminated thanks to a dip below the presumed Point A.

This dip is a break down from the rising wedge and, on its own, would target the wedge base of 1.2623.  But, I’ve got my sights set on bigger prizes — namely 1.2464 on the way to 1.1597.

Here’s a medium close up of the jumbled mess surrounding today’s action:

UPDATE:  2:00 PM

We’re on the brink of either a break-out or break-down, with the market refusing to show its cards.  The 5-min chart perfectly illustrates:

The purple Bat pattern reversed this morning at its .886, as it should.   Since then, it’s traced out a smaller (red) Bat pattern that’s stalled at its .886 — which is right back to where the first pattern’s .886 was!

If we can hold here, it’s a 1-2-1-2 with the next move down sharply.  Otherwise, there’s a pretty obvious 5 waves up being traced out, starting at Friday’s 1337 low.  Since we’re so close to the presumed top of 1354.32, it’s a pretty simple matter to set stops for those inclined to take a bearish position.

Likewise, anyone playing the upside breakout would do well to set stops around 1346ish.

UPDATE:  12:15 PM

Euro rally still muted, with the daily charts pointing to a decline…

 …though, in the short run, a slightly higher alternative is a possibility.  Since Gartley’s complete at a .786 Fib retracement, I’m always on the lookout for that Point D to become a Point B in a larger Butterfly pattern (purple).

The pattern that points to the downside and fulfills the break down from the rising wedge is a Crab (in red.)  We’ll want to keep an eye on 1.3027 on the downside and 1.3320 on the upside.

UPDATE:  11:00 AM

VIX is back testing its recent break out of a falling wedge.

UPDATE:  10:20 AM

I believe this is my first ever copper chart.  If, as many believe, it’s a valid indicator for the stock market, the implications are bearish.

UPDATE:  9:40 AM

The 1354.32 high is still intact, as SPX slightly exceeded our .886 target of 1352.39 at 1352.63.  If all we get is this bearish Bat pattern inside the recently completed bearish Crab pattern, we should see downside momentum pick up throughout the day.

ORIGINAL POST:  9:00 AM

Since the Greek parliament voted to throw their citizenry (almost goofed and called them constituents!) under the bus yesterday afternoon, the euro has rallied predictably.  But, what an incredibly anemic rally… from Friday’s close at 1.3195 to a high of 1.3283 overnight to complete a bearish Gartley pattern on the 60-min chart.  This represents a 78.6% retrace of the recent high. EURUSD is currently trading at 1.3273, up 0.3%.

This, in itself, has to be pretty underwhelming for the bullish case.  The AUDUSD saw a similarly apathetic response — currently up 0.66% to 1.0746 after reaching 1.0777 overnight.  Given that it just broke down from a rising wedge, this .618 retrace smacks of a backtest — as in “the last thing you see before a rising wedge produces a decent decline.”

All this would be interesting enough, but look at what’s happening to the eminis.  They reached 1352.25 last night — a mere .50 from making a new high.  If the the euro itself can’t manage at least a 1% rally and 88.6% retrace, why the heck did US stocks go hog wild with a 97% retracement?

I’m glad I asked. Among its failings, the ECB hasn’t quite mastered the art of turning a sow’s ear into a silk purse.  Perhaps Madison Avenue is too far away, I don’t know.  But, TPTB here in the good ol’ US of A are very adept at turning any event with even a hint of eau de taureau into a full blown, quantitavish second coming.

BTW, that larger rising wedge you see is the absolute end of the road for wave 2 without a breakout or breakdown.  The key will be whether 1354.32 can hold this morning.  The ideal turning point would be 1352.39, to complete a bearish Bat pattern on the 60-min chart and set up the H&S; pattern we discussed last week.

More later.

ORIGINAL POST:

Back on Feb 1, I made a case for 465 as an interim top for AAPL and SPX topping at 1333 [see: Butterflies and Crabapples].  AAPL obliged me by tagging my target on Feb 6, then — probably to spite me — tacked on another 28 points, closing at 493.42 Friday.  During that same time, SPX has tacked on another 1.6% which, compared to AAPL’s 6%, strikes me as a little “divergency”.

Now, inches away from the psychologically important $500/share, is it time to throw in the towel?  Jumping in front of a runaway freight train like AAPL is always a little dicey, but a very precise tag of a 17-year old trend line — part of an obvious rising wedge — makes a good argument for an imminent reversal. 

Way up in the tip of that rising wedge, we’ve completed a Crab within a Crab pattern —  one of my favorite bearish set-ups.  We’ve overshot the 1.618 and 2.0 extensions on the smaller (red) pattern and are closing in on the 2.24 at 505.29 and the 2.618 at 529.25.

There are two possible Point X’s the larger (purple) pattern: 192.24 or 202.96.  Starting at 192.24 puts a 3.618 extension at 490.81, meaning we’ve already overshot it.  

Starting from 202.96, on the other hand, puts the 3.618 at 529.59 — only 34 cents from the above-mentioned 2.618 extension for the smaller pattern.

So, we’re seemingly stuck with ignoring a coincidence (529.59 v 529.25) or ignoring a very precise tag of a 17 year-old trend line.  Ugh.  It’s a little like the SPX and NDX, with ample reason for a reversal right here, right now — but a decent argument for a little bit higher.

Last time we saw this strong a bearish rising wedge pattern on AAPL was in 2000.  Check out the rising wedge and its aftermath — an 88.6% retracement.

In 2000, AAPL had also just completed a Crab pattern — at its 3.618 extension (see below.)   It came with head fakes at the 1.618, 2.24 and 2.618 extensions, so it’s not much help in deciphering our current plight.  But, that thin red diagonal trend line is the exact same line as the purple TL on the weekly chart up above.   I have a pretty good feeling about that line…

If it holds, AAPL should reverse very soon — maybe even Monday.  If it breaks, AAPL could tack on another 7.3% to 529 before cratering.   And, if AAPL craters in any meaningful way, there goes the neighborhood.   Either way, long term holders of this remarkable stock would do well to hedge their downside.

GLTA.

UPDATE:  3:55 PM

The NDX RSI trend line was broken on the daily chart.

VIX to 21.98 intra-day high, up almost 40% this week.

ORIGINAL POST:

VIX has broken out of its falling wedge.  We should see some sort of backtest, which will establish a right shoulder in an inverse H&S; pattern, then a run up to 25+.  Note that each target which is fulfilled on an IHS completes another, larger IHS — in a reverse waterfall of ever-increasing values.

I wrote about the same pattern last July, just prior to the market imploding [see: Do You Feel Lucky?]

But, an IH&S; pattern on VIX wouldn’t be worth much without a matching H&S; pattern on SPX, though, right?  Here’s a little one worth watching:

Of course, little ones can turn into bigger ones…

Which can turn into really, really big ones…

More later.

The trend line from May 19, 2008 through May 2, 2011 and yesterday’s close.  Note that it connects the wave 2 top in 2008 to what I believe is the wave 2 top in 2012 — kindred spirits, if you will.  Thanks, again, to RS for pointing it out.

AUDUSD charts, relating to discussion below…