pebblewriter

Tag: harmonics

  • Results: Feb 28, 2013

    The S&P 500 gained about 6% between the last update (Dec 20, 2012) and the Feb 19 highs of 1530.94.   The index gave back half of the gains over the subsequent week, then retraced 88.6% of those losses over the next two sessions for a total move through Feb 28 of about 11%.  Our calls accomplished approximately 19% over the same period.

    December, 2012

    December 2012 wrapped at +9.20%, leaving us with a total return for 2012 (since inception on Mar 22) of 97.99%.1  The S&P 500 was up 2.36% over the same period (excluding dividends) and the average hedge fund earned 7.32%.2

    I had anticipated a significant reversal in mid-December at SPX 1346, and the market accommodated with a 3.3% decline into the year’s end based on an analog that served us very well since April, 2012.

    January 2013

    Even though Congress failed (as expected) to really resolve the fiscal cliff dilemma, the market saw the resolution as “good enough” and pushed higher during the low-volume New Year’s holiday week.

    The next two weeks were spent in harmonic pattern limbo, deliberating whether a double-top or a new high was in the works.  Finally the question was settled by a push past the Sep 2012 highs — right into the next harmonic target range. With only 9 sessions left in the month, there was little time left in which to accomplish much.

    At +4.46%, January was the first month in which our numbers lagged the S&P 500.  I realize that 4.46% is nothing to sneeze at; but, in retrospect, I should have exercised more caution around big news days, used tighter stops and perhaps traded a bit more frequently.

    February 2013

    At +11.43%, February was a much more rewarding month — but, not without its challenges.  Prices fluctuated by 10 or more points in a full two-thirds of the trading sessions.  But, volatility creates trading opportunities, so I took full advantage.

    It seemed at the time that I traded too frequently (33 times, including 14 intra-day trades that added 5.50%.)3  Looking back, however, SPX gained only one point between the Feb 1 close and the Feb 28 close.  In other words, it was the kind of month where day traders are rewarded, and buy-and-hold types should have gone skiing.

    If nothing else, February convinced me that a managed fund could deliver added value for pebblewriter subscribers who have neither the time nor the inclination to sit by their computers waiting for the next trade signal.

    Even for those who do, there is the problem of time lag.  Under the best of circumstances, it can take several minutes to transmit a newly hatched idea — more if charting or explanation are involved.

    By the time a member receives, reads and acts on the information, prices can move appreciably — potentially reducing returns and/or increasing risk.  A fund should, at the very least, eliminate the lag.  I am currently working with advisors and will announce details as soon as possible.

    Summary

    As of Feb 28, we’re up 113.08% since inception for an average monthly return of about 10.05% — on track with our Dec 20 report.  I’ll continue to work on finding the right balance between trade frequency and risk-adjusted returns.

    The road ahead looks no less bumpy.  Will QEn sustain uninterrupted new highs, or will this market — like every one before it — soon reveal its Achilles heel?  Interest rates are on the rise, while a whole host of economic indicators and corporate earnings are flagging.

    Personal income is slumping, employment isn’t much better, the euro zone is officially back in a recession, China is faltering and central banks the world over are racing to devalue their currencies as debt continues to skyrocket.  Where’s the upside in that scenario?

    The day will come when money printing and accounting gimmicks alone won’t be enough to levitate the stock market.  At the end of the day, real profits require that someone, somewhere, buys something.  A bull market that rallies to new highs while ignoring that basic premise is, in my opinion, not long for this world.

    Stay tuned…

     

    Notes:

    1 According to this Barron’s article, only one of the hedge funds tracked by HSBC earned over 40% in 2012; another 7 earned 30% or more. The average fund earned 7.32% and about one third lost money.

    2 Remember, our “performance” is based on a theoretical unleveraged portfolio utilizing only long and short positions in SPX based on the tops and bottoms identified on pebblewriter.com.  Trading expenses are not included.  Your mileage will vary.

    3 Late last year, I began experimenting with leaving a core long or short position in place while placing short-term or intra-day trades.  The jury is still out on the effectiveness of this strategy.

  • Update on Bonds: Mar 07, 2013

    If rates really are heading back up in the near future, we’d expect to see bonds take a hit (and stocks, too, but that’s a different post.)  Back on Jan 21, we focused on the 10-year treasury (ZN.)

    We observed that ZN had just completed a large Crab Pattern and broken down from a rising wedge, and appeared to be due for a “significant retreat.”

    The chart below shows a big Crab (grey), followed by another Crab (red), a Bat (white) and another Crab (purple.)  Each previous Crab Pattern completion has been followed by a significant retreat, so we might suspect one here with the purple pattern completion.

    Since then, both the purple and white channel lines have broken down, suggesting more downside ahead. The intersection of the white channel bottom and purple channel midline is coming up in early April, and prices have fallen from 132’160 on Jan 21.  But, where’s the “significant retreat?”

    Shifting focus to the 20-year as represented by TLT (just for grins), the charts show continued weakness over the next couple of months — provided TLT can push through some important support.

    The harmonic picture is negative enough – given the potential Gartley or Bat Pattern in play. But, the white and red channels have both recently surrendered a support line.  Backtests are complete, and the next support is down around the .786 at 114.5 — though I suspect the .886 at 112.26 will get the nod.

    Note that it intersects with the falling white channel midline, the falling red channel bottom and the large white rising channel midline — all around late May-June.

    A slight overshoot would tag the .500 at 110.18 on a larger harmonic grid (purple) and establish a Point B for a pattern that might lead prices back down below the white midline.

    The fly in the ointment?  Check out the dashed red trend line cutting across the middle of the chart. It has influenced a few turns, and is just below current prices at around 115.60.

    Stay tuned…

  • RUT: End of the Line?

    RUT has reached the upper bound of a well-defined channel that dates back to 1998.

    It could leak slightly higher in reaching for the top of the large rising wedge and some key Fib levels, but I suspect RUT has reached a turning point.

    continued for members… (more…)

  • Charts I’m Watching: Mar 1, 2013

    Getting a nice sell-off following the completion of the Bat Pattern we were tracking yesterday.  Shown below on the eminis…

    The downside path is clear.  But, bulls will probably go for the obvious IH&S with what should be a decent bounce somewhere around 1495-1500.

    The dollar reached our 82.136-82.281 target from several days ago, and the EURUSD has lost another important level of support: 1.30.

    More in a few…

    UPDATE:  09:40 AM

    SPX opening down sharply…Note that it turned yesterday at 1525.34, only 36 cents from one of the two targets we identified just before it opened at 1515.99.

    The market didn’t fall out of bed overnight, so I’ll take a long position on the open this morning in anticipation of tagging the .786/.886 combo at 1521.11/1521.19 or the .886 at 1525.70.

    I remain full short from 1525.34 (the 2:20 update for members) but will play any bounces as mentioned above.

    The key level today is 1496 – the bottom of the purple channel.  If this is broken, lots more downside where that came from — especially if the previous low at 1485 is taken out.

    UPDATE:  10:00 AM

    Nice post on Zerohedge earlier: You Rarely Know You’re in a Recession Until it’s Too Late.

    Referring to an ECRI report, ZH makes the following points:

    1) Think back to 2008, a couple of days before the Lehman failure. Looking at the data in hand, you would see GDP growth at about 1% in Q1 and 3% in Q2. More specifically, Q2 GDP growth had just been revised up on August 28 from 1.9% to 3.3%, sparking a 212-point Dow rally that day. http://www.nytimes.com/2008/08/29/business/29econ.html?_r=0

    2) In March 2001, 95% of economists thought there would not be a recession, but one had already begun.

    3) No economist predicted the 1990-91 recession beforehand.

    4) Hardly any economists recognized the severe 1973-75 recession until almost a year after it started. Indeed, that recession began with the ISM at 68.1, and payroll jobs growth did not turn negative for eight months.

    5) In 1970, unaware that the economy was nine months into recession, none other than Paul Samuelson said that the NBER had worked itself out of a job, meaning that improved policy expertise had made recessions very unlikely.

    6) In three of the last 15 recessions – specifically, in 1980, 1945, and 1926-27 during the Roaring Twenties – stock prices remained in a cyclical upturn.

    ECRI has caught a lot of crap for their recession call last Fall.  I know the feeling, as most economists I know (yes, I travel in exciting circles) think the worst is over.  I wish I shared their optimism.

    I mention this because of the positive ISM Mfg Report released this morning.  It’s being cited as proof of expanding activity.  Remember, the PMI is a survey of purchasing managers’ opinions about their business.

    They read the same newspapers and websites, watch the same TV, and are subject to the same MSM brainwashing as the rest of us.  A better than expected snapshot in time of their opinions does not mean the economy is just fine.

    UPDATE:  10:35 AM

    We got a bounce off 1501 — pretty close to the 1495-1500 range where we expected it.

    Any push back into green territory would be cause for an intraday long with tight stops, but not for giving up shorts.

    We just hit the .500 Fib of this morning’s decline, and the .618 is at 1516.63.  The top of the white channel is up ahead at 1518.50.  Any of these would take the index positive on the day.

    Would that mean the correction is over?

    continued for members... (more…)

  • The Big Picture: Feb 27, 2013

    ORIGINAL POST:  6:00 AM

    SPX ended yesterday just below our 1497 trigger point at the neckline.  I know the bulls would love to blow through this level and negate the H&S, but I think they’ve really got their work cut out for them, especially given the political mess in Italy and the looming US sequester.

    Bernanke isn’t likely to say anything new today.  And, judging from AAPL’s price action, the market isn’t looking to Cupertino for salvation.  The durable goods data?  Ho hum…  Saying it was a good number if you ignore defense and aircraft is like saying a shark attack was fine except for those pointy things in their mouths.

    Defense is due to get a lot worse starting next Monday.

    I’d put slightly greater odds on a breakdown of the purple channel.  As for targets, I’ve mentioned the 1474.51 level a lot – the Sep 2012 high and roughly where the SMA 50 was at the EOD (hat tip to Mike for the question.)

    I still think this area has potential, as a retracement to the .886 of the 1576-666 decline would set up a move to 1576 itself.  Why?  Think of stair-steps, where each major Fib tag or break is followed by a back test to a significant lower Fibonacci level.

    continued for members… (more…)

  • Bernanke Speaks

    PLEASE NOTE THAT MEMBERSHIP RATES ARE SET TO INCREASE ON MARCH 4.

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    A new day, a new bounce.  As we discussed late yesterday, SPX has reached the bottom of the purple channel that’s guided it since 1343.  So, naturally, we’ll get some reaction — probably at least to the white midline at 1495.

    Whether it sticks or not is pretty much up to Ben.  Press conference at 10AM EST.

    The yellow channel on the 30-min RSI shows decent support here.  Looks like resistance at the purple midline, though, likely in conjunction with the white midline mentioned above.

    I’ll be surprised, though, if we don’t make it all the way back to 1497 for a proper back test of the H&S neckline – yellow dashed line.

    UPDATE:  09:40 AM

    That’s close enough for me.  I’m closing my ST long position taken yesterday (3:50PM update) at 1490 for a 6-pt gain and will let my core short position ride — for now.

    Many Bernanke pep rallies have left me feeling like a crash test dummy.  I’ve learned to keep my stops tight or stay on the sidelines all together.  For intrepid day traders, I suggest staying nimble.  A breakout or breakdown is to be expected.

    But, we did just complete a H&S Pattern, and that counts for something — as do the incomplete harmonic patterns.  We’ll take a look as soon as the Bearded One is done scolding Congress for messin’ up a good thing.

    UPDATE:  12:30 PM

    Equities are clinging to gains following Bernanke’s testimony — which was mostly a non-event.  IMO, he said nothing to help the bulls’ or bears’ case, which means Italy and the sequester will likely drive prices over the next several days.

    We should continue to see periodic bounces over the balance of the day, but the onus is on the bulls now to turn the trend.  We’ll keep an eye on the 5 and 15-min RSI charts to determine breakouts that merit an intra-day long, and revisit the daily charts to get a sense of intermediate-term possibilities.

    continued for members… (more…)

  • Charts I’m Watching: Feb 25, 2013

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    ORIGINAL POST: 09:30 AM

    High potential for a pop and drop this morning, with key levels being 1523.74 and 1527.10.  I’m operating on the assumption that this is a bounce in the midst of a larger move lower.

    Recall that we shorted at 1530.50 on Feb 19 (the 2:45 update) and went long for a bounce at 1499 on Feb 21 (10:20 update.)

    I’m taking profits on the long position here at 1523.60 and going full short again.  Any move up through 1524 is cause to consider an intra-day long.

    Why am I suspicious of this rally? The dollar has back-tested the 25% line in the big rising channel, as well as the 1.272 Fib in what looks like a Crab to the 1.618 at 82.281 (and red .618 at 82.136.)

    The DX daily RSI also looks strong, having broken out of and back-tested the red channel and making a beeline for the intersection of the white and yellow channels.

    UPDATE: 10:00 AM

    SPX is taking a crack at the .886 at 1527.10.

    I’ll take an intra-day long position at 1524 with tight stops.  Keeping the short position unless we move up through 1530.

    UPDATE:  10:10 AM

    That move didn’t take long to fail. A reversal here leaves a nice tag of the top of the white channel, a tag of the 75% line of the light blue channel, a near tag of the .886 (1525.84 v 1527.10) and a nice reversal candle on the 60-min chart.

    Closing the intra-day long at 1524, and full short again from 1523.60 (above.)

    UPDATE:  11:25 AM

    SPX broke back down through the big purple channel midline, which augers well for further downside.  Watch for a backtest to the midline (around 1519.)

    UPDATE:  2:00 PM

    We’ve racked up a nice 24 points since shorting this morning, which is especially cool on the heels of the 26-point gain from our long position (the bounce from 1497) and the 32-point gain since originally shorting at 1530.50 on the 19th.  That’s a 5%+ week — much appreciated after the market’s directionless churning in the days leading up to 1530.

    As we approach the .886 retracement (1500.54) of the rally from 1497 to 1525, we should be on the lookout for a bounce at the still-important 1500.  A good place to start is the  RSI channels on short-term charts like the 5-min. A break of the upper bound of a well-defined channel is always a warning signal of building momentum.

    The US dollar is approaching our 82.22 – 82.28 price target and the top of the daily RSI channels we charted this morning.  It will likely need a breather before attempting higher.

    Much of its strength is being attributed to euro weakness which, of course, is being blamed on Berlusconi’s unexpected success in the Italian elections.  It goes without saying that his reelection would be a disaster for the euro zone.

    The EURUSD, which had carved out a solid channel to the moon (well, 1.39 anyway) broke down and backtested the channel that’s guided its upside since last July.

    We should expect some support here at the .886 of the 1.2996 to 1.3710 rally at 1.3078 (also a potential price channel bottom in yellow.)  It’s also the bottom of an RSI channel (below in white) on the daily chart.

    But, I’m not so sure that this support will hold.  We could be looking at a drop to the bottom of the red/yellow/white RSI channels, meaning the pair takes out 1.30 support.

    As unpopular as Monti is with Italians, Germany thinks he’s just swell.  He’s been a team player, falling in line with Merkel’s efforts to salvage Germany’s investments throughout the continent.

    Berlusconi, who was heavily criticized by his former contemporaries around the time of his resignation, is a wild card whose election, at best, would leave Italy with a divided leadership at a time when a unified front seems essential to the euro’s continued survival.

    This is not what the bulls needed, especially as they try to get through the sequester week unscathed.

    UPDATE:  3:00 PM

    Adding the complications of the euro mess to the sequester mess makes for a very tricky path ahead for equities.  Last week, I theorized that a decline to 1490 would make for a deliciously ambiguous setup (for market makers, at least) to fleece the greatest possible number of investors.

    Does that scenario still make sense?

    continued for members… (more…)

  • Charts I’m Watching: Feb 22, 2013

    ORIGINAL POST:  09:25 AM

    UPDATE:  09:30 AM

    SPX overshot our initial target by just a couple of points yesterday, reaching the channel 25% line at 1497.29 before getting the bounce I expected at 1499/1500.  Note that SPX completed a Bat Pattern down to the .886 in the process (larger white pattern.)

    The .618 Fib of the decline from 1530 is up ahead at 1518.09 — also the 1.618 of the 1422-1266 decline last summer (1518.57.) It intersects with the channel midline either later today or early Monday.

    Daily RSI reached the white midline as we expected, and is currently backtesting the purple midline. It’s still too early to say whether the new falling channel I sketched in yesterday is legit or not.

    The dollar is backtesting the channel line it broke through Wednesday after completing a Butterfly Pattern (the small white grid) to the 1.272, but the 1.618 awaits at the confluence of the purple 1.272 and red .618 up around 82.1-82.2 after the backtest is complete (not yet, I think.)

    The big question: what happens after the backtests are complete?

    continued for members… (more…)

  • Charts I’m Watching: Feb 19, 2013

    The dollar index has cleared an important hurdle to higher prices.  Note RSI has broken above and is back-testing the red channel on the daily chart.

    Of course, it’s not a back-test until it reverses and stays higher.  The first key level to confirm a breakout are the Jan 4 80.995 high — at which point DX will run into the 25% white channel line.The harmonic picture is muddled at best, as DX has tagged the .886 retracement of the move from 78.725 to 81.515 three separate times – preferring to remain in a trading range rather than breaking down or out.

    Breaking this RSI channel is the first very (potentially) positive news for the bears in quite a while.  One caveat, there’s probably a 50:50 chance that the DX RSI will need to tag the midline of the rising white channel before the reversal really gets going.

    One potential problem here is that the midline and the red channel top don’t intersect until early March, so this could mean sideways currency markets for several weeks — which would likely be accompanied by higher stock prices.

    For the past week or so, I’ve been opening intra-day long positions on strength while maintaining a short core position.  Today is no exception.  I’m closing my intra-day longs here at 1526.50, as we’ve reached a 1.618 Fib level of the latest move up.  A move back up through this level, and I’ll add them back on again.

    I must admit, though, that I find the SPX RSI chart a little unnerving.  If DX looks bullish based on a channel breakout, SPX does, too.  Chart coming shortly — if my internet signal will cooperate.  I’m writing today from a hotel lobby in Lake Tahoe, and the connection is a bit slow.

    SPX is obviously trading above the upper bound of the big rising wedge again today (the yellow TL).  This marks five days in a row, though we’ve managed to close below it every day.  As we’ll discuss today, the next day or two is vitally important to the market’s overall direction.

    I put the yellow TL at about 1524 today (1521 on the arithmetic scale rather than log).  This is drawn from the July 21, 2011 high of 1347(inception) through the Sep 14, 2012 1474.51 high.  IMO, a strong move through this TL would be very bullish and practically guarantee 1553-1555 — with one caveat.

    In 2011, there were three potential Point X’s to kick off the downside and calculate the upside: 1370.58 on May 2, 1356.48 on July 7 and 1347 on July 21.  I referred to these in the post All The Pretty Butterflies in calling the April 2012 high.

    I favored the 1347 high because it best fit with the definition of a Butterfly – a Point B reversal at the .786 retrace. The 1356.48 Butterfly didn’t quite reach its .786, and the 1370.58 Butterfly didn’t come close.

    As we found out, the 1347 pattern was the correct one.  It signaled a reversal at its 1.272 Fib of 1421.05 and, in fact, the market reversed at 1422.38.  The decline from there to 1266 set up another Butterfly Pattern (in purple). The 1.272 actually targeted 1464, but SPX stretched to reach the .886 of 1576-666 at 1472 (ultimately reaching 1474.51).

    Because 1347 figured prominently in two important patterns, and neither of the other potential point X’s have seen any real reaction off their Fibs, I have pretty much discarded them.

    But, I show them above just in case.  This market is currently flouting, if not completely ignoring, the rules.  And, the 1356.48’s 1.618 at 1530.58 might suddenly decide to assert itself.  It’s just above current levels and would make for a nice intra-day high.

    And, the 1370.58’s 1.618 at 1553.39 lines up very nicely with the 1.618 extension of the 1474-1343 decline (yellow pattern.)  It also would fulfill a measured move I’ve been tracking.

    On the chart above, the distance from (2) to (3) is 207.77.  Adding 207.77 to the 1343.35 low (4) yields 1551.12 – right there with those 1.618 Crab Pattern completion points. If SPX can break through 1530.58, there are no other Fib levels between there and 1553.

    Obviously, we are still looking at strong negative divergence on the daily and 60-min charts. And, with the sequester looking more and more likely, we’re not lacking for a catalyst. But, the market continues to shrug off some pretty strong headwinds.  I still wouldn’t commit new capital at these levels, and I sure wouldn’t be long and unhedged. But, a close above that yellow trend line and 1530.58 Fib would be hard to ignore.

    More later.

    UPDATE: 2:00 PM

    SPX broke back above 1526.50, so I put the intra-day long on yet again.  As we approach 1530.58, I’ll take another stab at lifting it.  We’re certainly not making any money with this approach, but I’m much less concerned with a sudden 30-point updraft than a sudden 100-pt downdraft.  I seem to have plenty of company, however, and this concerns me.

    OTOH, today’s USA Today headline reads: Mutual Funds Breaking Records.    The only thing missing is the exclamation point.  Inside the Money section, you can take your pick of “Has Dow Outgrown Crazy Days?”, “It’s Hard Out There for a Repo Man” and the imponderable “Fast Foreclosures Help Home Prices.”

    Turns out judicial foreclosures slow things down because the banksters are occasionally restrained by the rule of law (that must really suck for them.)  When it takes too long to kick families out of their homes, it creates “real uncertainty.”  Of course, so does having your former neighbors living out of their Toyota.  Guess that’s where the repo man comes in.

    More shortly.

    UPDATE:  2:45 PM

    Taking another stab at an interim top here at 1530.50 — lifting the intra-day long, full short again. Tight stops on this sucker; as mentioned above, whole lot of blue sky between 1530 and 1553.

    Remember, this is the 1.618 of the Crab Pattern formed by the 1356.48 to 1074.77 decline between July and October 2011.  Downside targets that matter include 1474.51, of course. But, first, let’s think about the scenario that would confuse the most people: a decline to 1490-1497 that would leave open the possibility of a new Butterfly/Crab higher to 1553-1555.

    I’m being summoned for Dad duty (the kids are off school this week and it’s snowing outside – yay!) so I’ll leave it at that for the time being.  I’ll be back later this evening to tidy things up and answer any questions.

    GLTA.

  • AAPL: Breaking Out?

    AAPL has bounced nearly 50 points since its Jan 25 low, leading many to wonder whether the worst is over.  When I started this post about a week ago, all the talking heads were talking “breakout.”  We’ll give the old crystal ball a polish and see whether that’s likely.

    When I posted that AAPL seemed to finding support back on the 24th, it was because of the long-term channel (in purple, below) that’s guided its upside since the year 2000 [see: That All You Got?] The top of it, by the way, is up around 1775.

    AAPL bottomed the next day at 435 (one point from our Nov 27 forecast), and obviously still hasn’t broken that channel.  The channel top, by the way, is currently up around 1880. [note: these long term charts are as of Feb 6.]

    As we’ve noted before, there are other long-term channels at play, too.  Note the white channel casts a rather bearish pall, while the yellow channel promises at least a bounce here.  So, which to believe?

     

    GETTING HERE

    We’ve been very fortunate in forecasting AAPL over the past several months, calling several significant tops and bottoms with decent accuracy.

    Nov 8:  Harmonics Are Your Friend:  

    It looked like AAPL was about to bottom out, followed by a sizable bounce.

    “AAPL should get a brief bump higher as SPX does — perhaps to 600 or 620.  Of course, if it stalls there, it will have formed 5/6 of a huge H&S pattern… “

    It bottomed 6 sessions later when the S&P 500 dropped down to tag our 1344 target  [see: Charts I’m Watching Nov 15.]  From there, we were looking for a bounce to 600.

    Nov 27: Update on AAPL:

    As AAPL approached our 600 target, I anticipated a reversal and completion of a Head & Shoulder Pattern that would bounce first at the neckline before plunging below.

    “A reversal here could quite likely spell a return to the channel bottom — which will be around 434…

    …it’s easy to imagine a scenario where prices drop to [the neckline at] 500 into the end of the year, but can’t quite seal the deal on the H&S pattern…

    If, on the other hand, AAPL breaks down below [the neckline], look for a back test followed by a more serious plunge.”

    AAPL topped out two sessions later at 594 and plunged to the neckline at 501 where it failed to “seal the deal,”  bouncing for two weeks before finally falling below the neckline on Jan 15.

    It back-tested the neckline for a week before taking a “more serious plunge” down to 435, one point from our original Nov 27 target.

    GOING FORWARD

    The purple channel has done its job so far.  The big question is whether it can continue to stave off the damage of the completed Head & Shoulder Pattern.  H&S Patterns commonly back test their necklines.  Back tests can even exceed the neckline, as has AAPL’s in several cases.

    As we’ve discussed many times, AAPL has been in a fairly tight price channel all the way down from 705 (below, in white.)

    The upper bound of this channel intersects with the H&S neckline at about 498-500 around Feb 19 (there is some wiggle room, depending on exactly how the channel is drawn.)  This likely represents the extent of any short-term upside.

    As for the downside, the white channel midline intersects with the purple channel at about 450-452 around Feb 20.  The white upper bound intersects with the purple channel bottom  465 on Mar 18.

    But, note the large red falling channel.  It’s dicey to consider it well-established, since the “top” consists of only one tag.  But, it looks to me like it has potential over the medium-term.  Today, AAPL is testing its 25% line; and, a close above 473 or so would be positive — arguing for the more bullish of the two scenarios above.

    The daily RSI recently poked up through the white midline and the yellow 75% line, but appears to be backtesting both.  This would be consistent with a dip to 450, where AAPL could back-test the white price channel midline and the purple channel bottom (the purple circle).

    From there, the top of the yellow RSI channel beckons — which probably corresponds with a return to test the neckline around 500.  As noted above, this could occur as soon as Feb 19 if prices are to remain in the white channel.

    And, what if prices break out of the white channel?  Keep an eye on the RSI.  A break above the neckline would probably require a break out from the yellow RSI channel.  While, remaining in the yellow channel probably means a period of consolidation until early May, when the purple channel and neckline intersect at about 490.

    One other issue often discussed is the expiration of the 30-day wash sale period.  The biggest volume spikes in the past few months were the plunges of Nov 16, Dec 6, Dec 14 and Jan 24-25.  So, the only remaining relevant buyers who might rush back in are those who sold in the 435-465 range on Jan 24-25.

    Since the stock has gained a few points since then, these sellers might be expected to believe the worst is over and that it’s safe to re-enter at these levels — especially since the rest of the market is setting new highs.

    SUMMARY

    My best guess at this point is a test of the purple channel bottom around 450-455.  If it bounces, it has potential to the white channel top around 495.

    But, it’s important to note that AAPL just closed a huge gap.

    60-min RSI shows support coming up from a channel midline (white) as well as a rising channel bottom (purple.)

    If the channel bottom breaks down, the H&S target is way down around 304 — only a short hop from the yellow .618 at 317 and the white .786 at 307.

    GLTA.