The story of an otherwise lackluster consolidation day was AAPL’s event to announce its new iPhone, TV stuff and the latest edition of its watch.
Almost any day in the market is an AAPL day since the the stock is so big (an unprecedented $830 billion market cap) that is shakes and rattles every index it is in.
So today started out with the stock gaping up and immediately selling down, taking the Nasdaq with it. It then chop-choped back up to its high of the day as its event opened. There is a common saying the stock market that goes “buy the rumor, sell the news.” Well, the traders indeed sold the news, taking the stock down two points into the close.
See the charts below.
For day traders that was just fine. AAPL’s news was worth 40% in its in-the-money puts from the open of its “event” to the close of the market, 80% at the greatest measure of its tank from its high on the news. If one shorted its “news” in the stock itself, it would have been worth two points to the close. Five-hundred shares and one could actually afford their over-priced phone. A thousand shares one could buy two and give the second one to your kid.
To your kid! A thousand-dollar phone! You must be kidding!
And P.S.: that was supposedly good news.
So what now?
AAPL had an “outside day” which is a continuation pattern in technical analysis and since the stock came into the day on an upswing it is likely to recover today’s small drop and continue higher. Especially since it has enough cash on hand and the prospect of a lot more to buy its own stock.
As for the general market all three of my swing signals remain on buys, and long-term breadth is accelerating somewhat to the upside so there is more rally to come.
SWING TRADING SIGNALS:
PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Buy. (Day 2).
VOLATILITY: Buy, (Day 2).
LONG-TERM BREADTH: Buy(Day 12).
CNN MONEY’S FEAR AND GREED INDEX: (64 rising, entering greed level).
NIFTY-50 STOCK LIST: 31 Buys; 19 Overbought, 3 Oversold, 6 new buys today, 9 new sells.
Bellwether stocks meeting 5-minute day-trading criteria for a buy on the open: NFLX, FSLR, BABA, BID.
(click on the chart or a larger view)