By: Jeff Cooper
Hit and Run Trading Morning Report - September 13, 2023
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The Market Doesn’t Fall Far From the Apple Tree
APPL is the beneficiary of a virtuous cycle of buying.
However, when the worm turns, the unwind can be vicious.
In AAPL’s case, the reversion to the mean can become particularly negative
Because it is in virtually every index and every fund, it becomes a source of funds.
When the market gets spooked…or worse when the Margin Man comes calling.
And the more selling is done, the more selling is perpetuated and with APPL such a large weight, the more it drops, the more selling pressure is exerted on the overall market.
All of a sudden the passive, sedated mechanical trade starts to question the narrative.
From 2023’s low 124 low in January, AAPL ran up to 198 on July 19th.
12 days later AAPL gapped below its 50 day moving average courtesy of the Chinese Communist Party.
As long time readers have heard me say ad nauseam, the news breaks with the cycles, not the other way around and APPL had satisfied a full 540 degree price cycle at its July high.
Because 200 represents 540 degrees (a true square, a cube) up from the 124 low and
124 squares July 19th for a Time/Price square-out.
Time is more important than price so when Time was up APPL reversed shy of the perfected 200 target.
90 degrees down from the July 198 high is 184.
180 degrees down is 171.
270 degrees down is 158.
AAPL’s structure shows it is in a wave 3 decline with a projection to 158 tying to the prior breakout pivot in March.
A weekly AAPL shows a Rule Of 4 Breakout in May led to a runaway move.
I paralleled a channel (purple) off the tops line.
Notice that AAPL broke the bottom rail of the trend channel, bounced and rolled over below the channel.
AAPL is sitting on last ditch support… the blue bottoms line for 2023.
In sum, AAPL turned its 3 Week Chart down on the week of August 14th which perpetuated a strong two week rally.
The 2 consecutive higher weekly highs satisfied my Minus One/Plus Two weekly sell setup.
A Minus One occurs when the 3 Week Chart is pointing down (3 consecutive weekly lows).
The Plus Two occurs when you then get 2 consecutive higher weekly highs.
The subsequent angle of attack to the downside last week indicates AAPL is a conspicuous source of funds.
Next stop…a backtest of the Ghost Line, the breakout connecting the January 2022 high with the March and August 2022 highs.
This Ghost Line currently resides at 158-160.