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AAPL Falling Back to Lower Edge of Trading Range, PT $128-$134Primary Chart: AAPL's Parallel Channel and Key Trendlines with Fibonacci Retracements from November 4 Swing Low to November 15 Swing High SUMMARY: AAPL appears to have begun a leg lower in earnest, along with SPX. A break below $140.35 will help confirm. SPX broke below its recent swing low on November 29, 2022, which is consistent with AAPL's failure at its trendline and push lower after this rejection. The short-term PT zone = $128-$134 range. Whether AAPL and SPX are heading to new lows yet is unclear. So let's take this one level at a time. December 2022 could be choppy with many market participants buying dips hoping for a Santa Rally. It may be tough sledding—or it may be straight to new lows. Does anyone have a crystal ball? AAPL appears to have begun a leg lower in earnest. The most that can be said in the short term is that AAPL is heading back to the lower edge of its trading range. SquishTrade suspects that will be broken in the intermediate-term future, but until it is broken, the lower edge of the trading range at $128-$134 will be the target. A much more detailed technical analysis of AAPL was posted on November 5, 2022 , linked below in Supplementary Chart A (November 5 analysis). In summary, the longer-term view for AAPL remains negative. Several downside PTs are listed in the November 5 analysis—please refer to it for further reading on the broader picture in AAPL. Supplementary Chart A (Prior November 5 Analysis of AAPL) The shorter-term case for downside is supported by several factors. First, price was resoundingly rejected (on a log chart) at the downward TL (yellow) from mid-August 2022 swing highs. See Supplementary Chart B. Price has also broken through a few key short-term Fibonacci levels shown in Supplementary Chart B. Supplementary Chart B: In addition, please notice on Supplementary Chart B another technical phenomenon. Price formed a Pinocchio bar, which SquishTrade has discussed in past technical analyses. Sometimes these work well. Basically, a long upper or lower wick pierces a key level or trendline, which represents a false move. For a more detailed discussion of a Pinocchio bar, or a false break / whipsaw move, please read SquishTrade's prior posts on this subject here and here . Both prior Pinocchio bars worked exactly as expected. But this does not mean that all Pinocchio bars will represent exhaustion. So far, AAPL's Pinocchio bar above the yellow TL from mid-August 2022 highs has been working. But AAPL has remained very choppy this year, which is part of the reason why SquishTrade does not want to commit yet to the view that a much larger downside leg is underway right now . That leg may be coming next year, however, or it may have started already. It's still unclear. For the time being, it helps to take this one level at a time. Technicals point to further weakness and downside ahead, and the best PT SquishTrade sees at this time is $128-$134 PT. And this PT range represents prior lows from October and November 2022 ($134 area) as well as the lower edge of the parallel channel ($128-$129). Second, price retraced to the .786 retracement of its recent downward swing from November 15-29, 2022. But price failed at that key retracement. See Supplementary Chart C below: Supplementary Chart C: Third, refer back to the Primary Chart above. The gap fill area lies around $138-$140. The .786 retracement also lies near this level (the .786 retracement of the Nov. 4-15 rally—price has traded within the range of this rally for over two weeks, which is why that remains important). In any case, this $138-$140 area presents short-term supports, i.e., obstacles (or conditions precedent) to AAPL reaching the $128-$134 PT above. AAPL could bounce at this $138-$140 area perhaps, so evaluate the bounce and consider whether that may be weak enough to return and break through this area when the bounce completes. As always, trade in accordance with a set of rules and your overall trading system, with risk management being the most important part. SquishTrade attempts to provide technical analyses that present a perspective on the price action in indices and various securities but does not purport to provide actual trading signals. Some may prefer to wait, for example, for a bounce (if one occurs) before entering any shorts. Thanks for reading. Let me know what you think too. ________________________________________ Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed. Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders. DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
NASDAQ:AAPLShort
by SquishTrade
10
AMD's False Breakout above Short-Term TrendlinePrimary Chart: Down Trendline from November 2021 to Present and Several Anchored VWAPs Recent False Breakout above Short-Term Trendline After hitting a new low on September 29, 2022, AMD had a brief a rally off the lows . This led to a brief break above a shorter down trendline from August 4, 2022 peaks (light blue down trendline) Now, AMD looks to have faked out the bulls and bottom pickers again. Before the close, AMD's price sunk all the way back to the trendline, perhaps just below depending on how exactly it is drawn, after seeming to push decisively above it. After hours it sunk well below that trendline again with preliminary earnings results that were well under expectations. Notice the daily candle from October 6, 2022. Some technicians call this a Pinocchio candle or bar. It has a long upper shadow that pushes above a key level, but the shadow being the only part of the candle above the key level by the close of the price bar. For another example for purposes of comparison, consider AMC's most recent short squeeze (which was smaller than many others in the series of short squeezes it has seen). Here, AMC formed a extremely large Pinocchio bar that effectively signaled the exhaustion and reversal that ensued. That one worked exactly as expected. A Pinocchio price bar shows up when the bar breaks temporarily above a level of resistance and then falls back below it. It also can appear when the bar breaks temporarily below a key support level, and then reclaims that level by the close of the bar. Essentially, a Pinocchio bar is a failed breakdown or failed breakout that occurs within a single price bar. Some basics of Pinocchio bars follow below for those unfamiliar with the term: Martin Pring, a technical expert, writes that these bars "give a false sense of what is really going on." Pinocchio bars tend to create bull or bear traps depending on the direction the long upper shadow points. Failed upside breakouts, such as the one shown here on AMD's chart, lock in unwary bulls with a loss by the close of the bar. Shorts similarly get stopped when intraday bars pierce well below support and then whipsaw back above that support by the close. In Martin Pring's technical-analysis reference books, he explains that the "false break" that develops is "indicative of exhaustion since the price cannot hold above the strong resistance reflected by the line ." In short, like the character Pinocchio's nose that grows when he lies, the price move beyond the resistance / support ends up being a false move, and the bigger the false move, the bigger the lie. Just because price is in a severe downtrend does not mean that prices can behave irrationally. How many sharp and powerful bear rallies have occurred so far in this market, especially in beaten down laggards? For example, price could go down and retest the lows and then rally up to high $70s. Or it could make new lows, and then rally hard back up to a key Fibonacci level, such as the .382 or .618. Until price can start exceeding major swing highs and lows, and its down trendline, it's not a great candidate for bull-trend trading or investing. Additional Comments and Considerations Not long ago, stocks like AMD and NVDA were some of the hottest technology stocks traded in the world. They had become veritable market leaders not just in their innovative technology products but also in price leadership. In terms of relative strength, AMD and NVDA both spent plenty of time at the forefront of one of the most powerful bull markets in history (funded by extra liquidity and easy-money policies of central banks) from 2020-2021. But then the cracks started to appear in what otherwise appeared to be some of the most formidable stocks on the planet. Major indices began to roll over not long afterwards. AMD has not gone unscathed. Its downtrend is not difficult to see with the clearly demarcated lower highs and lower lows. On the Primary Chart, note the orange down trendline that has contained price since November 2021 peaks. VWAPs confirm the view. The dark blue VWAP is anchored to the all-time high from November 30, 2021. It's hard to imagine that there was quite a lot of liquidity on that day, with a number of buyers paying that price at the very top, at $164.46. It can be a viable strategy to strategically buy stocks that have been hitting new 52-week highs showing extraordinary relative strength, but this time, buying at the all time high didn't work out so well for some. How many times have traders and investors started eagerly buying the dip in this bear? The chart tells the tale. Quite a few major swing lows, with candles having a nice long lower shadow, appear AMD's YTD chart. Each rally may have made a nice trade for nimble countertrend traders, but for investors hoping they caught the low of a pullback, or even better a multi-year low, disappointment ensued. AMD's days of heroic market leadership along with NVDA continue to be a distant memory as continues to fall to new lows. Should anyone be a knife catcher and hope to have a multi-bagger in 10 years? That's a question for your financial advisor or your own due diligence if you're fundamentally oriented. But from a technical perspective, a lot has to change with regard to the structure before it's safe to buy. Jesse Livermore had a fantastic adage that applies well to this situation, which was recently published by @InvestMate in an Editor's Pick here on TV: “Don’t take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don’t be an impatient trader.” Credit and thanks to @InvestMate for reminding everyone of these timeless truths to help in trading and understanding markets.
NASDAQ:AMDShort
by SquishTrade
6