Max pain thesis: So long AAPL closes above max pain on OE Friday, AAPL is in a multi-month rally. It usually closes near highest OI (calls) when in multi-month rally and near highest OI (puts) when in multi-month decline.
Max pain (Dec)=$195, max pain (Jan)=$150 and max pain (Apr)=$185
Highest OI (Dec calls)=$210 and OI (Dec puts)=$180.
Highest OI (Jan calls)=$210 and OI (Jan puts)=$140.
Highest OI (Apr calls)=$210 and OI (Apr puts)=$140.
Comment: Closed above max pain (Nov) of $195, near current pain of $200. AAPL is still in a multi-month rally.
A count for the perma-bull:
Primary degree wave 1 originates from $82.33,
1.i=$82.33 to $133.50, length=$51.17
1.ii=$133.50 to $119.38, ret=27.6%
1.iii=$119.38 to :
iii=i, $170.55
iii=1.618i, $202.17
iii=2.618i, $253.34
Comment: Perma-bull count is not likely. The highest probability is AAPL is in 1.iv (see post dated Nov 13).
Max pain thesis: So long AAPL closes above max pain on OE Friday, AAPL is in a multi-month rally. It usually closes near highest OI (calls) when in multi-month rally and near highest OI (puts) when in multi-month decline.
Max pain (Dec)=$195, max pain (Jan)=$150, max pain (Apr)=$185 and max pain (Jul)=$195 nice debut.
Highest OI (Dec calls)=$210 and OI (Dec puts)=$185.
Highest OI (Jan calls)=$210 and OI (Jan puts)=$80.
Highest OI (Apr calls)=$210 and OI (Apr puts)=$140.
Highest OI (Jul calls)=$210 and OI (Jul puts)=$230.
Comment: With max pain (Jan)=$150, what might happen on OE Friday?
If Primary degree wave 1 originates from $78.20, it is an extended fifth wave impulse with following lower degree counts:
1.i=$78.20 to $103.00, length=$24.80
1.ii=$103.00 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 $172.49
1.v.(2)=$172.49 to $164.11 - wave 2 usually ends inside here or near 52-week EMA.
1.v.(3)=$164.11 to $188.90
1.v.(4)=$188.90 to $185.55 - wave 2.A usually ends inside here or near 13-week EMA.
1.v.(5)=$185.55 to $208.71
Note: Many possible counts for 1.v. Merely stating the more optimistic count.
Agreed on the many possible counts for 1.v. However, I’m not sure this one is valid (I’m curious why you say it’s the most optimistic). Basically, it seems to me 1.v.(1) is too long, which may be the cause of the following problems:
1.v.(2) ret=15.8%, isn’t that against the rules?
1.v.(3) seems extremely short in price and time, especially for a 3 within an extended wave?
So, I thought maybe change 1.v.(1) so it ends at $146.40 and then (2) zigzags to $134.42 (ret=44.3%), with the rest the same, then (3)=2*(1). Would that work? Although my preference would be to have (3) end at $208.71, (4) ending at $185.57 and (5) currently underway or perhaps truncated (failed) at $208.
Mace - 14 November 2009 01:08 AM
If Primary degree wave 1 originates from $82.33, count is:
1.i=$82.33 to $133.50, length=$51.17
1.ii=$133.50 to $119.38, ret=27.6%
1.iii=$119.38 to $208.71, length=$89.33
1.iv=$208.71 to:
14.6% ret=$195.68
23.6% ret=$187.63
38.2% ret=$174.59
50.0% ret=$164.05
I think my preference above for 1.v.(3) is much like this count’s 1.iii. Only problem here is the lower channel line from start of i through end of ii gets breached during iii, which I thought shouldn’t happen (may be a guideline but not a rule)?
In any case, that 26.3% retracement target for 1.iv (or 1.v.(4) in the other count above) falls pretty close to the $185.57 recent low. If that’s the case (please correct me if I’m doing this wrong, I’m trying to imitate Mace):
1.v=$185.57 to:
v=i, $236.74
v=1.618*i, $268.36
v=2.618*i, $319.53
Possible count for 1.v so far:
1.v.(1)=$185.57 to $208, length=$22.43
1.v.(2)=$208 to:
23.6%=$202.70
38.2%=$199.43
50.0%=$196.79
61.8%=$194.14
76.4%=$190.87
Possible count for 1.v.(2) so far:
1.v.(2).(a)=$208 to $197.76, length=$10.24
1.v.(2).(b)=$197.76 to $206, ret=80.5%
1.v.(2).(c)=$206 to:
(c)=(a), $195.76, (2) ret=54.6% of (1)
(c)=1.618*(a), $189.43, (2) ret=82.8% of (1)
Or, If 1.v.(2) finished at $197.76 (ret=45.7%) then:
1.v.(3)=$197.76 to:
(3)=(1), $220.19
(3)=1.618*(1), $234.05
(3)=2.618*(1), $256.48
Thank. You’re doing great. I’m on vacation with my family in Disneyland, LA. I’m leaning towards your last count i.e. AAPL is in 1.v.(3). If not for those celebrity bears’ prognosis, I would have bought a bunch of near term ATM calls. Erring on the safe side, I’m 2/3 long AAPLs, 1/3 long calls, with cash (share price - call price) to pickup cheap LEAPS if those celebrity bears are correct.
Btw, until S&P clears 1230, I would regard it to be in wave B. My thinking remains that completion of S&P wave B would coincide with completion of AAPL’s wave 1.
Max pain thesis: So long AAPL closes above max pain on OE Friday, AAPL is in a multi-month rally. It usually closes near highest OI (calls) when in multi-month rally and near highest OI (puts) when in multi-month decline.
Max pain (Dec)=$195, max pain (Jan)=$150, max pain (Apr)=$185 and max pain (Jul)=$200 up $5.00.
Highest OI (Dec calls)=$210 and OI (Dec puts)=$180.
Highest OI (Jan calls)=$210 and OI (Jan puts)=$80.
Highest OI (Apr calls)=$210 and OI (Apr puts)=$140.
Highest OI (Jul calls)=$200 and OI (Jul puts)=$165.
Comment: ...
EW: Yesterday’s $196.83 could be 1.v.(2).c or 1.iv.c. Note that 40-day EMA is at $196.04 and $196.81 was a critical resistance in Oct.
Possible count for 1.v.(2) so far:
1.v.(2).(a)=$208 to $197.76, length=$10.24
1.v.(2).(b)=$197.76 to $206, ret=80.5%
1.v.(2).(c)=$206 to: (c)=(a), $195.76, (2) ret=54.6% of (1)
(c)=1.618*(a), $189.43, (2) ret=82.8% of (1)
If yesterday’s low of 195.75 is (2), possible targets for 1.v.(3) are:
(3)=(1), $218.18
(3)=1.618*(1), $232.04
(3)=2.618*(1), $254.47
Keep in mind current targets for v:
deagol - 25 November 2009 09:18 PM
1.v=$185.57 to:
v=i, $236.74
v=1.618*i, $268.36
v=2.618*i, $319.53
Mace, is there a way to come up with wave duration targets? Fundamentals point to $270-$330 in one year.
Max pain thesis: So long AAPL closes above max pain on OE Friday, AAPL is in a multi-month rally. It usually closes near highest OI (calls) when in multi-month rally and near highest OI (puts) when in multi-month decline.
Max pain (Dec)=$195, max pain (Jan)=$150, max pain (Apr)=$185 and max pain (Jul)=$200 up $5.00.
Highest OI (Dec calls)=$210 and OI (Dec puts)=$180.
Highest OI (Jan calls)=$210 and OI (Jan puts)=$80.
Highest OI (Apr calls)=$210 and OI (Apr puts)=$140.
Highest OI (Jul calls)=$200 and OI (Jul puts)=$165.
Comment: ...
EW: Yesterday’s $196.83 could be 1.v.(2).c or 1.iv.c. Note that 40-day EMA is at $196.04 and $196.81 was a critical resistance in Oct.
AAPL reached a low of $190.28 today, near the 1.618*(a) target for wave (c).
deagol - 25 November 2009 09:18 PM
Possible count for 1.v.(2) so far:
1.v.(2).(a)=$208 to $197.76, length=$10.24
1.v.(2).(b)=$197.76 to $206, ret=80.5%
1.v.(2).(c)=$206 to:
(c)=(a), $195.76, (2) ret=54.6% of (1) (c)=1.618*(a), $189.43, (2) ret=82.8% of (1)
From the higher degree wave (2) targets:
deagol - 25 November 2009 09:18 PM
Possible count for 1.v so far:
1.v.(1)=$185.57 to $208, length=$22.43
1.v.(2)=$208 to:
23.6%=$202.70
38.2%=$199.43
50.0%=$196.79
61.8%=$194.14 76.4%=$190.87
(Maybe this breach of the 76.4% fib favors the wave iv count? Not sure how that rule works, alternating waves or something like that.)
If today’s low of 190.28 is (2), possible targets for 1.v.(3) are:
(3)=(1), $212.71
(3)=1.618*(1), $226.57
(3)=2.618*(1), $249.00
This count’s targets for higher degree v:
deagol - 25 November 2009 09:18 PM
1.v=$185.57 to:
v=i, $236.74
v=1.618*i, $268.36
v=2.618*i, $319.53
Working out an alternate 1.iv count. Only question is if 1.iii ends at $208.71 or with a failed 1.iii.(5) at $208. Mace?
i=$78.20 to $103.00, length=$24.80
ii=$103.00 to $82.33, a zigzag, ret=89.3%
iii=$82.33 to $208.71, length=$126.38
iv.a=$208.71 to $185.57
iv.b=$185.37 to $208.00
iv.c=$208.00 to ...
c=0.618 of a, $193.70 c=a, $184.86, regular flat
c=1.618 of a, $170.56
For the first time since Mar, AAPL enters into the ichimoku cloud. Chart. However, it has not issued a sell signal yet. Current price behavior favors the wave iv count. Btw, I would be overseas for a couple of weeks.
Edit: I’ve presumed that iv is a flat. Could be a triangle, abcde.
Max pain thesis: So long AAPL closes above max pain on OE Friday, AAPL is in a multi-month rally. It usually closes near highest OI (calls) when in multi-month rally and near highest OI (puts) when in multi-month decline.
Max pain (Dec)=$195, max pain (Jan)=$160 up $10.00, max pain (Apr)=$185 and max pain (Jul)=$200.
Highest OI (Dec calls)=$210 and OI (Dec puts)=$180.
Highest OI (Jan calls)=$210 and OI (Jan puts)=$185.
Highest OI (Apr calls)=$210 and OI (Apr puts)=$140.
Highest OI (Jul calls)=$200 and OI (Jul puts)=$165.
Comment: AAPL trading below max pain (Dec). Buying opportunity or time to sell all out? Investigating as to why max pain (Jan) went up by $10.00, I noted that there are heavy transactions of Jan calls of strike price $200 and $210 today. I speculate that the increase of open Jan calls at these strike price is why the max pain (Jan) had gone up. Can we presume those are long calls?
... It would be interesting to know which indicators would show completion of wave 1 earliest. Haven’t done such comparison before. Relevant multi-week trend following indicators are EW, ichimoku cloud (daily price enter the cloud), moving average (13-week EMA turns down), ADX (weekly ADX crosses above DI+), weekly MACD (MACD crosses below signal) and weekly RSI (RSI crosses below 70). So far, weekly ADX have crossed above DI+ which mean a multi-week correction is about to start. Btw, in daily chart, RSI and MACD are both bearishly divergent with price.
What are indicators saying about $208.71?
Ichimoku cloud. Even though it has not issued a sell signal yet, AAPL has entered the cloud. I read it as an early indicator that wave 1 has possibly been completed. Issuing a sell signal would confirm this reading.
Moving average, 13-week/52 week EMAs. 13-week EMA has not turned down yet. However, AAPL is touching 13-week EMA. If broken, early sign that wave 1 could be completed.
From above chart, weekly MACD has crossed below signal and RSI has crossed below 70. I read this as saying wave 1 is completed.
Weekly ADX has correctly indicated that AAPL would be in multi-week correction. Look like it would be developing into a multi-month correction.
Thinking aloud. What would I do if I’m a fund manager who have bought AAPL early in the year? I would sell AAPL now to book the gains to ensure that I would get the 20% profit sharing. Waiting for another 20 points gain from Santa Claus rally is not worth it. Likely longs here are late bulls who’re boarding a late train, hoping for a Santa Claus rally. Last week reaction of an unexpected lower unemployment rate is telling. Good news can’t rally the market. Hence, even if $208.71 is not completion of wave 1, it is at least a completion of wave iii, AAPL is in wave iv. Can someone give me an alternative optimistic interpretation of above technicals?
... It would be interesting to know which indicators would show completion of wave 1 earliest. Haven’t done such comparison before. Relevant multi-week trend following indicators are EW, ichimoku cloud (daily price enter the cloud), moving average (13-week EMA turns down), ADX (weekly ADX crosses above DI+), weekly MACD (MACD crosses below signal) and weekly RSI (RSI crosses below 70). So far, weekly ADX have crossed above DI+ which mean a multi-week correction is about to start. Btw, in daily chart, RSI and MACD are both bearishly divergent with price.
What are indicators saying about $208.71?
Ichimoku cloud. Even though it has not issued a sell signal yet, AAPL has entered the cloud. I read it as an early indicator that wave 1 has possibly been completed. Issuing a sell signal would confirm this reading.
Moving average, 13-week/52 week EMAs. 13-week EMA has not turned down yet. However, AAPL is touching 13-week EMA. If broken, early sign that wave 1 could be completed.
From above chart, weekly MACD has crossed below signal and RSI has crossed below 70. I read this as saying wave 1 is completed.
Weekly ADX has correctly indicated that AAPL would be in multi-week correction. Look like it would be developing into a multi-month correction.
Thinking aloud. What would I do if I’m a fund manager who have bought AAPL early in the year? I would sell AAPL now to book the gains to ensure that I would get the 20% profit sharing. Waiting for another 20 points gain from Santa Claus rally is not worth it. Likely longs here are late bulls who’re boarding a late train, hoping for a Santa Claus rally. Last week reaction of an unexpected lower unemployment rate is telling. Good news can’t rally the market. Hence, even if $208.71 is not completion of wave 1, it is at least a completion of wave iii, AAPL is in wave iv. Can someone give me an alternative optimistic interpretation of above technicals?
Fundamentals are also saying it should have closed at $210-$230 yesterday
The further out into the future, the more accurate my fundamental analysis tends to be. Yesterday? Forget about it! my FA for yesterday, today, or tomorrow (i.e. my fair value) has been off by more than 100% sometimes… it’s easier to use TA for that, although best TA indicator I can suggest is the 1-day SMA and even that can be off by a few % points… unless you want to get into the 1-minute charts.
I’ve been trying to understand EWT to make sure that my far-out future price does not ever require an invalid count (I’d hate to be responsible for breaking EWT), and sometimes to predict the past (still having difficulties in this but the long-term past is a bit clearer than the immediate past or present, see below).
Mace - 04 December 2009 03:46 PM
Wave iv count is:
i=$78.20 to $103.00, length=$24.80
ii=$103.00 to $82.33, a zigzag, ret=89.3%
iii=$82.33 to $208.71, length=$126.38
iv.a=$208.71 to $185.57
iv.b=$185.37 to $208.00
iv.c=$208.00 to ...
c=0.618 of a, $193.70 c=a, $184.86, regular flat
c=1.618 of a, $170.56
For the first time since Mar, AAPL enters into the ichimoku cloud. Chart. However, it has not issued a sell signal yet. Current price behavior favors the wave iv count. Btw, I would be overseas for a couple of weeks.
Edit: I’ve presumed that iv is a flat. Could be a triangle, abcde.
Thanks. $185.57 to $208.00 looks like an impulse to me (or else please suggest a lower-level 3-wave count for your 1.iv.b). This means it’s either 1.v or 1.iii.(5) (both imply truncated fifths supported by your weak indicators), or as I prefer, 1.v.(1) (valid as long as $185.57 holds). Only If $185.57 is breached I’ll concede we’re in primary 2 or 1.iv as you say, but starting at $208.00.
So, continuing with my preferred count for 1.v.(2):
(2).(a) or (2).(a).[1]=$208 to $197.76, length=$10.24
(2).(b) or (2).(a).[2]=$197.76 to $206, ret=80.5%
(2).(c) or (2).(a).[3]=$206 to:
w3=1.618*w1, $189.43 (13-week EMA currently at $189.57)
Anything for w3 beyond this point would most likely invalidate this count, so we would need to switch to 1.iv.(a).[3] or 2.(a).[3].
If $190.32 is (c)=1.535*(a), then ret(2)=79% of (1), not far from 76.4%
If $190.32 is (a).[3]=1.535*[1] then:
(a).[4]=190.32 to:
14.6%=$192.57
23.6%=$193.99
38.2%=$196.28
50.0%=$198.14
61.8%=$200.00 then (a) could be LD? or reject count in favor of (2).(c) complete at $190.32.
Mace, could you please repost or point me to the correct labeling convention/nomenclature? I’m a little confused with these lower level corrective counts. Is it 1.v.(2).(a).[3] or 1.v.(2).[a].[3]?
Mace - 06 December 2009 10:54 AM
Mace - 06 December 2009 10:51 AM
Mace - 28 September 2009 03:30 PM
...
What are indicators saying about $208.71?
...
Can someone give me an alternative optimistic interpretation of above technicals?
hmmm… now you’re being silent to yourself!?
Indicators weren’t saying that for $208.72, but rather for 208.00. My optimistic interpretation is, technicals now have room to go up once again?
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nice debut.
$10.00, max pain (Apr)=$185 and max pain (Jul)=$200.
or time to sell all out? Investigating as to why max pain (Jan) went up by $10.00, I noted that there are heavy transactions of Jan calls of strike price $200 and $210 today. I speculate that the increase of open Jan calls at these strike price is why the max pain (Jan) had gone up. Can we presume those are long calls?
Yesterday? Forget about it! my FA for yesterday, today, or tomorrow (i.e. my fair value) 
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