AAPLTalk, 10/24/13 Market Close: Twice-Measured Move – “Uncomfortably Bullish” Before Earnings

(UPDATE:  Had yesterday’s daily chart linked by accident.  If you already read the post but wondered where the right chart is, click here.)

To the “twice-measured move” part of today’s post title – there’s (1) the 50-or-so point measured move from the confirmed inverted head and shoulders-looking breakout, and (2) a disconnected bull flag-looking breakout (mid-September to Sep. 23 peak), which also happens to measure just about 50 points.

Both measured moves suggest a bullish move from the breakout point of around 490 to approximately 540.

Now, measured moves obviously aren’t the final word in anything trading – they’re only tools, and simple ones at that, which work better in some situations and make zero sense in others (say, a measured move on a massive macro head and shoulders trigger that would put a stock at a negative price :D).  But both bullish hypotheses are playing out just about perfectly right now – and that’s leaving out the potential macro bull flag (though with air pocket) from 388ish-513ish.

Though AAPL’s been having a banner rally so far, the rally itself presents an “uncomfortable” situation for AAPL bulls (including myself) who endured varying degrees of pain during the Great Multi-Month Downtrend.  Call it “Stockholm Syndrome” of a kind, but this pre-earnings run-up seems almost too good to be true.  10 up days out of the past 11.  A brief selloff that didn’t amount to anything as long as you didn’t get faked out by it.  A noticeable lack of disappointment by the market following Tuesday’s iPad event.  What’s this?  AAPL trading at a multiple of over 13, and moving up 10% before earnings?  It almost feels like a trap! 😛

Visibility is still quite poor in my humble opinion, but as “improbable” as the current rally seems, the trend is undeniably up until proven otherwise.

On the hourly chart, there’s potentially a pennant/wedge-seeming resolution to the upside (as also shown by AAPL being on the bullish side of a BB expansion and MACD-h crossover to positive territory), and the price action is setting up yet another great-looking intraday bull flag:

aapl-hourly-102413close

On the daily chart, MACD-h still increasing at a steady, non-mountain-peaking pace – I’m no expert but its recent trajectory looks noticeably different than many previous peaks even going back to last year.  And while AAPL is “extended” from the EMA-8, it’s still handling the upper BB region exceptionally well, showing tremendous strength through the relative volatility compression indicated by the daily BBs in mid-October:

aapl-daily-102413close

Any points above to look out for?  Some have pointed to the 540ish area as a potential magnet, and there is a non-div-adjusted gap at about 541 from Jan. 3 of this year.  Since AAPL has been filling price gaps on the way up – heck, seems as good a point of reference as any.  It does somewhat line up with the measured moves I mentioned earlier.

There’s also a small gap with a low of about 572 (the next day saw a massive drop to 538), but…let’s not get too far ahead of ourselves.

Immediately below levels to watch, in my humble opinion, are the recent 522-526ish action area; 513ish-516ish (prior resistance, a couple of data points indicating recent support); and the 507ish-511ish action area from based on “consolidation highs” on Oct. 18 and the two intraday dips on Oct. 22.  It’s not as easy to find downside points of reference when you have 10 out of 11 up days. 😛

Three trading days left until earnings.  Best of luck to all!

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