How about a possible b-wave of a 4th wave a-b-c? Best case $132. Worst case $120.
$132, $120 is target of b or c? a is from where to where? $132.88 to $144.66 is an impulse. Btw, I don’t see $120 as a possibility since max pains are all above $130.
Hussman thinks we’re in a bear rally, ” ... I’ve noted frequently that the price-volume internals of the recent advance has been much more consistent with a short-squeeze and normal retracement, than of a fresh high-sponsorship bull market ... until we see investors broadly anticipating and discounting the second wave of mortgage resets, we most probably will not be inclined to take an unhedged exposure to market fluctuations. There are landmines between here and there.”
How about a possible b-wave of a 4th wave a-b-c? Best case $132. Worst case $120.
$132, $120 is target of b or c? a is from where to where? $132.88 to $144.66 is an impulse. Btw, I don’t see $120 as a possibility since max pains are all above $130.
That is just one alternative. There are are others far more bearish.
Been noting these “max pain” postings with interest. It seems to work within a trading market where vested interests can move the markets toward these numbers. However one should not get too religious over their observance. In a trending market, some options as well as this concept, will explode! For example, back last Sept 1 what were the max pains for Oct & Nov.? I guarantee no one foresaw then that by Oct option expiry, AAPL would be trading under $100—well under by Nov!
... Been noting these “max pain” postings with interest. It seems to work within a trading market where vested interests can move the markets toward these numbers. However one should not get too religious over their observance. In a trending market, some options as well as this concept, will explode! For example, back last Sept 1 what were the max pains for Oct & Nov.? I guarantee no one foresaw then that by Oct option expiry, AAPL would be trading under $100—well under by Nov!
You’ve not been following the max pain theory in this thread. You’re commenting on what most AFBers think about max pain. I agree with your comment about that max pain theory.
Both chinabox and me saw five waves from $132.88 to $144.66. You see a zigzag?
130 corresponds to a 23.6% retracement of the March low to the recent high. 120 is the 38.2% retracement.
I don’t see 120 as too big a pullback in the broader scheme of things. As a point of interest, there’s a gap around 130 and another around 124.
$130 and $120 are both within the price zone of 1.iv, $133.50 to $119.38. For extended third wave impulse, wave 2 always correct to price zone of 1.iv.
130 corresponds to a 23.6% retracement of the March low to the recent high. 120 is the 38.2% retracement.
I don’t see 120 as too big a pullback in the broader scheme of things. As a point of interest, there’s a gap around 130 and another around 124.
In support of this view is the fact that in free fall of very early 2008, it was the 120 level that finally held, leading to the big run up in the spring of ‘08. Of course, 120 was then mashed in the fall of ‘08 (when one of the gaps occurred). 120ish also held in the mini-crash during the late summer of of ‘07.
If we go under 125, my plan is to repurchase the 10% of my shares that I sold a couple weeks ago at 140ish. I would consider buying again at around 95, and again at 80. All of this presuming no material change in the fundamentals.
(knowing next to nothing about EW, I hardly ever post here. But I enjoy lurking and learning from the rest of you.)
As we saw yesterday, when employment data caused the market to faint, there is a very tenuous belief that we are on the road to recovery. The financials were hit first, since investors believe that banks will be the first to loose as more jobs are lost—less savings, more credit card debt and defaults, mortgage defaults, defaults on car loans, etc. Retail and consumer goods would be next, along with tourism, travel, gas, etc. The Max Pain price of a particular stock may not be a viable indicator in situations of panic. We’ve seen lately how exuberance over AAPL has caused it to close higher than its Max Pain, despite the machinations of the market makers. The same forces can close it lower. And a lot of option positions can rapidly change between now and August, September, etc. if things look too dark. Summer is thought of as the market’s slow season, when low volume can cause stagnation in share prices, and easily tipped balances. 2008 has taught us all (who are still standing at all) to be more careful, not just in AAPL, but in all holdings. People seem all too ready to abandon their positions when gay clouds appear on the horizon.
As we saw yesterday, when employment data caused the market to faint, there is a very tenuous belief that we are on the road to recovery. The financials were hit first, since investors believe that banks will be the first to loose as more jobs are lost—less savings, more credit card debt and defaults, mortgage defaults, defaults on car loans, etc. Retail and consumer goods would be next, along with tourism, travel, gas, etc. The Max Pain price of a particular stock may not be a viable indicator in situations of panic. We’ve seen lately how exuberance over AAPL has caused it to close higher than its Max Pain, despite the machinations of the market makers. The same forces can close it lower. And a lot of option positions can rapidly change between now and August, September, etc. if things look too dark. Summer is thought of as the market’s slow season, when low volume can cause stagnation in share prices, and easily tipped balances. 2008 has taught us all (who are still standing at all) to be more careful, not just in AAPL, but in all holdings. People seem all too ready to abandon their positions when gray clouds appear on the horizon.
I agree, 1000%. *Wanting* a recovery now, doesn’t mean we are *getting* a recovery. I think there are a LOT more nasty cavernous potholes in our path. As people lose their jobs and cannot find employment, and particularly, considering how fearful they are about the future, there will be more and more credit card defaults…I haven’t seen much talk about how bad that could get. Honestly, it amazes me that people would allow their homes to be foreclosed and keep paying their credit cards. Are they really *doing* that? I think the foreclosures we are seeing now are the people who just can’t hang on, any longer. I understand that the market begins to correct before “main street”, but how far ahead can that happen? Does anyone *really* believe we are a few months from better employment and housing numbers?
Both chinabox and me saw five waves from $132.88 to $144.66. You see a zigzag?
I see what you mean and why you say it could be a truncated wave 5. That being the case then you can count the wave action from May 13 as one degree larger 5 waves, of an even larger 3 from March. Highly likely the corrective action then would be down to a high probability $120. But AAPL could trade between $145 and $120 for many weeks even months tracing out a complex 4th wave, before a larger 5th wave takes it to $150+ range.
Both chinabox and me saw five waves from $132.88 to $144.66. You see a zigzag?
I see what you mean and why you say it could be a truncated wave 5. That being the case then you can count the wave action from May 13 as one degree larger 5 waves, of an even larger 3 from March. Highly likely the corrective action then would be down to a high probability $120. But AAPL could trade between $145 and $120 for many weeks even months tracing out a complex 4th wave, before a larger 5th wave takes it to $150+ range.
I find labeling conveys the wave relationship clearer. If I’m correct, your count would be:
i=$78.20 to $103.00
ii=$103.00 to $82.33
iii=$82.33 to $146.40
iv.a=$146.40 to $132.88
iv.b.(a)=$132.88 to $144.66
iv.b.(b)=$144.66 to ... in progress, would not be lower than $132.88.
iv.b.(c)= likely not higher than $145.
iv.c=could be as low as $120.
v=$150+
Sounds about right. Except it is not certain at this moment what the waves for iv.b. are going to be until it is mostly over. And iv.c is a “likely” target at $120…but it could go far lower.
Sounds about right. Except it is not certain at this moment what the waves for iv.b. are going to be until it is mostly over. And iv.c is a “likely” target at $120…but it could go far lower.
For AAPL to get as low as 120, we’d have to see the S&P, DOW etc all drop as dramatically. Perhaps checking out the waves for the S&P might give a clue as to the likelihood of such a drop, or exit/reentry points for AAPL. Since the big correction everyone on CNBC currently wants us to expect may be gradual in coming (over the summer months, for example), there may be enough time to be prepared and have a strategy in place.
Max pain thesis: So long AAPL closes above max pain (current month) on OE Friday, AAPL is in a multi-month rally.
Max pain (Jul)=$130, max pain (Aug)=$150 and max pain (Oct)=$130.
Highest OI (Jul)=$150 and OI (Aug)=$150.
Comment: If AAPL is still in multi-month rally, it would close above $130, likely just below $150 on OE Friday, Jul 18. Daily RSI, PPO and ADX are bullish. Stochastics is overbought.
Preferred count:
1.i=$78.20 to $103, length=$24.80.
1.ii=$103.0 to $82.33, ret=83.3%.
1.iii=$82.33 to $$133.50, length=$51.17.
1.iv=$133.50 to $119.38, ret=27.6%.
1.v.(1)=$119.38 to $129.31, length=$9.93
1.v.(2)=$129.31 to $121.75, ret=76.1%
1.v.(3)=$121.75 to $146.40, length=$24.65
1.v.(4)=$146.40 to $132.88, ret=55%
v.(5)=$132.88 to:
(5)=(1), $142.81, truncated
(5)=1.618 of (1), $148.95
v=i, $144.18
v=1.618 of i, $159.51
Comment: About a week ago, I said AAPL seems to be in 1.v.(5).(i) which is extended since stochastics is overbought and still going up, target of 1.v.(5).(v) is $150, target of wave (i) is $144 and (ii) is $137-9. Since, highest is $144.66 and lowest so far is $139.79 which is 41% ret for $132.88-$144.66. 61.8% ret is $137.38. Hence, (ii) is unlikely to have completed yet.
Alternative count (previously known as best-fit count):
1.i=$78.20 to $103, length=$24.80.
1.ii=$103.0 to $82.33, ret=83.3%.
1.iii=$82.33 to $$133.50, length=$51.17.
1.iv=$133.50 to $121.75, ret=22.9%.
1.v=$121.75 to $146.40, length=$24.65, almost equal 1.
Now in wave 2,
ret=23.6%, $130.30
ret=38.2%, $120.35
ret=61.8%, $104.25
Comment: The lowest point is $132.88, about 20% ret which is too shallow for wave 2. If this count is correct, then $132.88 is W, currently in X.b. X.c would be up. Watch out for Y which should bring AAPL down to $130 and not lower since max pain (Jul) is already $130. If lower than $130, then AAPL would not be in multi-month rally and hence this count would be invalid.
Conclusion: Next week, AAPL is likely to decline to $137-$139 before bouncing towards $142.50-$141.50 gap.
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