Elliott Wave Analysis (Archive)

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    Posted: 01 February 2010 11:07 AM

    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 (Feb)=$200, max pain (Mar) = $200, max pain (Apr)=$195,  max pain (Jul)=$200 down :-( $10.00.

    Highest OI (Feb calls)=$210 and OI (Feb puts)=$185.
    Highest OI (Mar calls)=$210 and OI (Mar puts)=$195.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$200.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.

    Comment:  $200 is the price point for bears and bulls to fight over.

    Bearish signals: 
    Weekly:  MACD below signal line.  RSI is bearishly divergence with price.  Price broke below 13-week EMA.
    Daily: MACD below signal and zero line.  RSI below 50 and trending down.  ADI trending up with -RI above +RI.  Lower high lower low since mid Jan.  Ichimoku issues a sell signal while price is below cloud.

    Comment:  Strong support at 52-week EMA, currently $169.  Weak support at $182.  If all can’t hold, I see $130.

    Edit:
    EW - Ted’s long term EW for AAPL.  See chart.

    [ Edited: 23 October 2011 09:45 PM by DawnTreader ]

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    Posted: 04 February 2010 03:06 AM #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 (Feb)=$200, max pain (Mar) = $200, max pain (Apr)=$190 down :-( $5.00 max pain (Jul)=$200.

    Highest OI (Feb calls)=$210 and OI (Feb puts)=$185.
    Highest OI (Mar calls)=$210 and OI (Mar puts)=$195.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$200.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.

    Comment:  Mentioned this “$200 is the price point for bears and bulls to fight over” on Feb 1, and the battle at here two days later.

    Bearish signals: 
    Weekly:  MACD below signal line and trending down.  RSI is bearishly divergence with price.
    Daily: MACD below signal and zero line.  RSI below 50 and trending down.  ADI trending up with -RI above +RI.  Lower high lower low since mid Jan.  Ichimoku issues a sell signal while price is below cloud.  Volume decreases with price increase. Price below 10-day EMA.

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    Posted: 07 February 2010 11:33 PM #2

    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 (Feb)=$200, max pain (Mar) = $195 dropped :-( $5.00, max pain (Apr)=$190 and max pain (Jul)=$200.

    Highest OI (Feb calls)=$210 and OI (Feb puts)=$185.
    Highest OI (Mar calls)=$210 and OI (Mar puts)=$195.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$200.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.

    Comment:  Continued decline in max pain is worrisome.

    Multi-week trend is bearish:
    Weekly:  MACD below signal line and trending down.  RSI is bearishly divergence with price.
    Daily: MACD below signal and zero line.  RSI below 50 and trending down.  ADI trending up with -RI above +RI.  Lower high lower low since mid Jan. Price below 10-day EMA and hugging along lower bollinger band.  Kijun below Tenkan.  Price action is below the Ichimoku cloud.

    EW:  From price action, I takes it that wave 1 has completed, waiting for wave 2 to complete at between $80 to $183, likely at $130.  Wave 2.A should complete at 52-week EMA/$165.

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    Posted: 08 February 2010 04:16 AM #3

    So long as $188.68 holds I’m sticking with this last decline from $215.xx as being 1.v.(2) instead of beginning of 2.a, and I can’t see a clear impulse for 2.a.(1), so far a lot of overlap.

    BTW, why 2.A? Here’s what I’m assuming about the labeling convention:

    Primary1-2-3-4-A-B-C
    Intermediate
    i-ii-iii-iv-a-b-c
    Minor
    : (1)-(2)-(3)-(4)-(5) / (A)-(B)-(C)
    Minute: (i)-(ii)-(iii)-(iv)-(v) / (a)-(b)-(c)
    Minuette[1]-[2]-[3]-[4]-[5] [A]-[B]-[C]
    Subminuette
    [i]-[ii]-[iii]-[iv]-[v] [a]-[b]-[c] 

    The rule I’m inferring is: arabic numeral waves go with uppercase letter corrections, and roman numeral waves go with lowercase letter corrections. Not clear about Cycle and Supercycle waves. If this is wrong please let me in on the right labeling.

         
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    Posted: 10 February 2010 11:36 AM #4

    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 (Feb)=$200, max pain (Mar) = $195, max pain (Apr)=$190 and max pain (Jul)=$200.

    Highest OI (Feb calls)=$210 and OI (Feb puts)=$185.
    Highest OI (Mar calls)=$210 and OI (Mar puts)=$195.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$200.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.

    Comment:  Just when u think there is no chance that AAPL would close above $200, market gives u some hope.

    EW:  Ted’s optimistic count is similar to Deagol’s and non-Elliottician Wheels’ view.  His optimistic count is valid till $165.  IMHO, AAPL would decline to 52-week EMA, if rebounces then optimistic scenario is likely, pessimistic scenario if breaks through.

    [ Edited: 13 February 2010 02:42 AM by Mace ]

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  • Posted: 11 February 2010 03:14 PM #5

    Mace - 10 February 2010 03:36 PM

    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 (Feb)=$200, max pain (Mar) = $195, max pain (Apr)=$190 and max pain (Jul)=$200.

    Highest OI (Feb calls)=$210 and OI (Feb puts)=$185.
    Highest OI (Mar calls)=$210 and OI (Mar puts)=$195.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$200.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.

    Comment:  Do trend of max pain reflects trend of price?  Leading or lagging?

    Multi-week trend is bearish:
    Weekly:  MACD below signal line and trending down.  RSI trending down.  Price below 13-day EMA.
    Daily: MACD below signal and zero line.  RSI below 50.  ADI trending up with -RI above +RI.  Lower high lower low since mid Jan. Price below 10-day EMA.  Kijun below Tenkan.  Price action is below the Ichimoku cloud.

    Comment:  Charts looks eerily like mid 2008, on the brink of breaking down.


    Deagol - Your labeling is correct.


    Mace, how does today’s action impact your EW outlook?

         
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    Posted: 11 February 2010 03:29 PM #6

    woodward - 11 February 2010 07:14 PM

    ... Mace, how does today’s action impact your EW outlook?

    I’ve lost count.  According to Deagol is 1.v.(3).  However, price action and other technicals are more consistent with wave 2.  Recapturing and closing above $200 on OE means Deagol is likely to be correct.  Almost certainly right if AAPL breaks above $215.59.  So far, as expected, AAPL is hesitant to cross above $200.  At this moment, I take it as a technical rebounce and AAPL would soon resume its decline to $170 in short order.

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    Posted: 11 February 2010 06:29 PM #7

    Mace - 11 February 2010 07:29 PM

    According to Deagol is 1.v.(3).  However, price action and other technicals are more consistent with wave 2.

    Agree with the action and technicals being more consistent with some kind of corrective wave. My gut feeling is it’s not wave 2. For that I would’ve expected a sharper, simpler zig-zag type of correction taking out $185 long ago. I think the complexity and resilience of $185-$190 suggests more of a 1.v.(2). I’m not saying it must be complete at $190.25 as it looks to have turned into a sort of triangle (completed at $195?) which is uncommon but not impossible.

    Because 1.v would’ve started at $188.68, a break of that level would invalidate my count and favor either a much more complex 1.iv (double or triple three like a flat-triangle combo) still ongoing or Mace’s preferred 2. On the contrary, a clear impulse from here would make it almost certain as 1.v.(3).(i). Perhaps today’s impulsive-looking move and retrace in the PM would be (i).[1] and currently in (i).[2] (norm target for [2] 61.8% retrace of [1] is $196.81). If so, fib targets of (i) would be $207.44, $209.25, $212.19, etc., which looks good for (i) of (3).

    A big factor in my disbelief of a 2 down to $160 or the norm $130 is my fundamental analysis (something that appears to be sacrilege among hardcore elliotticians). Such levels would make AAPL more undervalued than last year’s $80’s. I guess the indices would have to take out last year’s lows for that to happen. If by April we haven’t seen this cataclysm, it becomes less likely as there will be a new report and a new trailing EPS and a new, even lower PE, and require an even more cataclysmic crash of the indices.

    Or, it might be a very shallow wave 2 (23.6% retracement from $215.59 would be $184.13 within sight), which is possible but suspicious.

    [sorry for all the editing…]

    [ Edited: 05 November 2010 04:44 PM by deagol ]      
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    Posted: 11 February 2010 07:43 PM #8

    Deagol,

    Agree with your analysis.  You might want to monitor VIX and US dollar index too.  VIX is trending up which usually mean impending violent action.  US dollar trending up usually lead to decline in equity prices.  The upward trend of dollar looks impulsive, though it is pulling back now (so expect market to go up).  After finding support, around $79, it should resume its rally.

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    Posted: 12 February 2010 01:43 PM #9

    deagol - 11 February 2010 10:29 PM

    ...(norm target for [2] 61.8% retrace of [1] is $196.81). If so, fib targets of (i) would be $207.44, $209.25, $212.19, etc., which looks good for (i) of (3).

    Cool, so [2] completed at $196.75, targets for [3] are $201.50 (1.000*[1], HOD so far $201.64), $204.44 (1.618*[1]), $206.25 (2.000*[1]), $209.19 (2.618*[1]), etc. Hoping for a continuation into a strong close today.

         
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    Posted: 14 February 2010 02:37 AM #10

    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 (Feb)=$200, max pain (Mar) = $195, max pain (Apr)=$190 and max pain (Jul)=$200.

    Highest OI (Feb calls)=$210 and OI (Feb puts)=$185.
    Highest OI (Mar calls)=$210 and OI (Mar puts)=$195.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$200.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.

    Comment:  Just when u think there is no chance that AAPL would close above $200, market gives u some hope.

    EW:  Ted’s optimistic count is similar to Deagol’s and non-Elliottician Wheels’ view.  His optimistic count is valid till $165.  IMHO, AAPL would decline to 52-week EMA, if rebounces then optimistic scenario is likely, pessimistic scenario if breaks through.

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    Posted: 14 February 2010 08:01 AM #11

    Mace - 14 February 2010 06:37 AM

    EW:  Ted’s optimistic count is similar to Deagol’s and non-Elliottician Wheels’ view.

    I’m not going to be happy we are in a definite move up until AAPL breaks above 207 and retests that level from above. The reason I have upped my confirmation level is because that is the highest point that AAPL’s daily Ichimoku cloud will go in the next few days. I’ve seen quite a number of examples of cloud edges proving too much to overcome on daily and hourly charts (we cleared the hourly cloud on Friday, but only just entered the daily one). Even if the edge is moving in your favour and prices along with it, getting over the edge is not always easy.

    It’s not beyond the realm of possibility that AAPL climbs to somewhere between 205 and 207 where it hits that upper cloud edge and falls back down to the cloud bottom for OE.

    Depending on what happens on Monday in the markets that are open, we could see a gap up Tuesday, followed by some possible short covering early on, that cloud top hit and then the bears move in to take it down for OE. That’s all just speculation, but would also help take out the 205 puts. If we did by some chance get above 210 on Wednesday I would be very tempted to close out my long and get back in on a pullback a few bucks lower as that move may be short-lived and intended to close out the 210 puts (or sell 210 calls).

    For what it’s worth I can see the S&P eminis (/ES) retracing a lot of recent falls and possibly climbing as high as 1125 in the next few weeks, before it really tanks. I just noticed on Slope of Hope that Fujisan also thinks something similar. That move up would likely allow AAPL to put in another leg up in the expanding top pattern that’s been developing since mid-October.

    While fundamentals support a move higher I am still very wary of how the broader market could turn a new leg up into an even larger pullback once that move up is complete. You only need to look at 2007 to see how each successive correction got larger until January 2008 hit, followed by an even bigger correction in Oct 2008. That’s not to say that any larger pullback will fall below the magical 188, but it might just happen from significantly higher.

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    Posted: 14 February 2010 12:44 PM #12

    Deleted

    [ Edited: 15 February 2010 02:04 AM by runedge ]

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    Posted: 21 February 2010 04:34 PM #13

    I will once again copy-paste from Mace’s template… I’ll just add this “bias” metric from optionistics.com.

    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 (Feb)=$200, max pain (Mar)=$195, max pain (Apr)=$190, max pain (Jul)=$200.
    Bias (Feb)=$199.05, bias (Mar)=$197.21, bias (Apr)=$190.25, bias (Jul)=$202.39.

    Highest OI (Feb calls)=$210 and OI (Feb puts)=$190.
    Highest OI (Mar calls)=$210 and OI (Mar puts)=$185.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$185.
    Highest OI (Jul calls)=$220 and OI (Jul puts)=$200.

    Comment:  Closed above $200.  Multi-month rally is intact.

    Bullish (?) signals:  tongue laugh
    Weekly: RSI bounce off 50 in late Jan. Price regained 13-week EMA. MACD histogram bars flattening (last 4 bars no longer increasingly negative).
    Daily: MACD above signal and approaching zero line.  RSI above 50 and trending up since Feb. CMF trending up since Feb and near zero-line. ADX trending down (neutral) with +DI above -DI.  Higher high higher low since Feb. Ichimoku cloud looks to be thinning out ahead, and price bouncing within it. BB contracting fast (width near 3-month lows), with price above mid-BB and approaching descending upper-BB. Bigger black volume bars. Price above 10-day, 13-day, 20-day, and 50-day EMAs (all EMAs rolling over / confluence zone around $200.xx).

    EW: heck if I know. Key levels to watch for confirmation of either wave (3) up or 2 down: $206.xx and $190.25.

    [ Edited: 21 February 2010 05:39 PM by deagol ]      
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    Posted: 26 February 2010 01:42 PM #14

    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 (Mar)=$200 up grin $5.00, max pain (Apr)=$190, max pain (Jul)=$200.
    NUD: Bias (Feb)=$199.05, bias (Mar)=$197.21, bias (Apr)=$190.25, bias (Jul)=$202.39.

    Highest OI (Mar calls)=$210 and OI (Mar puts)=$185.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$200.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.

    Comment:  Bar is set higher at $200.

    Bullish signals:
    Weekly: RSI bounce off 50 in late Jan. Price regained 13-week EMA. MACD histogram bars flattening.
    Daily: MACD above signal and approaching zero line.  RSI above 50 and trending up since Feb. CMF trending up since Feb and near zero-line. ADX trending down (neutral) with +DI above -DI.  Higher high higher low since Feb.  Price above 10-day, 13-day, 20-day, and 50-day EMAs (all EMAs rolling over / confluence zone around $200.xx).

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    Posted: 27 February 2010 07:45 PM #15

    Mace - 26 February 2010 05:42 PM

    Max pain (Mar)=$200 up grin $5.00, max pain (Apr)=$190, max pain (Jul)=$200.
    NUD: Bias (Feb)=$199.05, bias (Mar)=$197.21, bias (Apr)=$190.25, bias (Jul)=$202.39.

    Highest OI (Mar calls)=$210 and OI (Mar puts)=$185.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$200.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.

    Max pain (Mar)=$200 up grin $5.00, max pain (Apr)=$195 up grin $5.00, max pain (Jul)=$200, max pain (Oct)=$210 up grin $10.00, max pain (Jan)=$170.
    Bias (Mar)=$197.00, bias (Apr)=$190.16, bias (Jul)=$201.74, bias (Oct)=$215.83, bias (Jan)=$167.46.

    Highest OI (Mar calls)=$210 and OI (Mar puts)=$185.
    Highest OI (Apr calls)=$210 and OI (Apr puts)=$185.
    Highest OI (Jul calls)=$250 and OI (Jul puts)=$200.
    Highest OI (Oct calls)=$210 and OI (Jul puts)=$220.
    Highest OI (Jan calls)=$300 and OI (Jan puts)=$200.

    What does NUD stand for?

    [ Edited: 28 February 2010 02:04 PM by deagol ]