4 CHARTS TELEGRAPHING EXACTLY HOW MUCH UPSIDE REMAINS IN THE MARKET
The market did manage to clear up some of the rain clouds overhead this week. Now that the Congressional circus has been put to bed, the market is free to focus on a consistently lubricated economic picture, as well as an earnings picture that may turn out to be brighter than expected. With that said, here are some of the upside targets in the weeks and months ahead: click chart to...
SYMMETRY AND IVORY LIVING TOGETHER IN PERFECT DISHARMONY: STARRING AAPL
In what can only be classified as a cantankerous start to the year, shares of AAPL have been forgotten by the market in favor of names like Bank of America and Delta Airlines. It suddenly seems as if society, as a whole, has become more dependent on refinancing their trailer home or buying an airline ticket to Nantucket, as opposed to having any reliance on all of the technological delights AAPL has brought us, in machine gun repetition. The fundamental developments involving such a turn of events are always delayed in revealing truths. We must, therefore, rely on the technical aspects of AAPL to tell us whether the market has developed a sense of Pinocchio driven disdain for current shareholders, only planning on reversing higher in short order OR if this is indeed a new reality for this former market leader. I have spoken often about the virtues of observing symmetry in a stock or an index. My definition of symmetry, simply put, is a stock or index that acts as it should in relation to important support and resistance points in the market. A stock that is exhibiting bullish symmetry will act perfectly in the face of its support areas, becoming extremely predictable and gracious in nature, allowing bullish shareholders to profit. A stock that is exhibiting bearish symmetry will act perfectly in the face of resistance areas, constantly thwarting the efforts of bullish investors, only rewarding bears. There is also a middle ground where a stock or index becomes entirely unpredictable, eating any speculator in its path. The chart below will demonstrate bearish symmetry in action with respect to AAPL and explain the consequences of such behavior. Before getting to that, here is an example of positive or bullish symmetry with respect to AAPL telegraphing the move to 700 in August http://www.zenpenny.com/wp-content/uploads/2012/08/AAPL.gif Here is bearish symmetry in action, with the current...
THE ROAD MAP FOR 2013: SAME RULES, DIFFERENT YEAR
In mid-November with the Dow sitting around 12,600, I posted a study demonstrating why the Dow was poised to move to 13,500 by year end. The basis of this study was the movement of the Dow in and around its primary trajectory, pictured here. During the final summary of the Dow 13,500 study, I noted the following: If this study should continue to provide the road map to the current market based on the relation to the trajectory, we know the following: 1. There will be very little downside volatility in the months and years ahead. 2. There will be very little upside volatility in the months and years ahead. 3. The market will be in a very slow and arduous bull market in the years ahead that feels like it is prone to collapse at any moment. Sound familiar? We’re already seeing that honey. 4. Declines of any more than 5% should be bought hand over fist. We are currently at a 7.5% decline from the recent peak. I believe there is a very strong possibility that the attachment of the market to this trajectory continues throughout 2013. If so, it gives investors an extremely accurate road map every step of the way. Here is an...
4 CHARTS THAT PAINT A FISCAL QUESTION MARK ON THE FOREHEAD OF THE MARKET
I was debating whether to even do a chart review this week given the unpredictability of the events surrounding the Fiscal Cliff. There come certain points, regardless of the analysis, when it is just useless due to overwhelming short-term events. I believe this is one of those points. Nevertheless, I have a streak of many uninterrupted weeks of providing a weekly chart review. I won't let Congress get in the way of that. This is an extremely confusing place that the market is currently camping in. Numerous crosscurrents abound, as I am about to show. I have started the process of reducing my net exposure a bit. In the process of moving down a 75% long position from 95% long. I have yet to take on a hedge, but may do so upon further weakness. Most likely in TZA. I'm airing on the side of caution to start the year. Well, that's if you want to call 75% long cautious. Matter of perspective, I suppose. click chart to...
5 CHARTS TO HELP YOU FORGET ABOUT THE CISCAL FLIFF
The week that was went pretty much as expected, with one primary exception. If you'll recall, last weekend I put a range on the Dow with upside in the vicinity of 13,350 and downside in the vicinity of 13,050 for the week. The actual high for the week was 13,365 and the low was 13,122. The path the market took to get there, however, was completely contrary to what I had expected. This was primarily due to the perceived shock of another Congressional blunder with respect to the nauseating Ciscal Fliff (I refuse to say it) causing the market to veer off track on Friday. I was expecting the Dow to end around 13,350 this week. Obviously, Friday's action threw a bag of flaming reindeer turds on the doorstep of this plan. I do not expect the bearish price action to last long, however. In fact, Friday may have been the extent of it. Downside for the week ahead is minimal, as demonstrated below: click chart to...
THE DAY THAT MARKED THE END OF THE RUN IN GUN STOCKS
This has been a long time coming. I commented on the fact that RGR, specifically, was under a tremendous amount of distribution in late October, stating that the stock was due for an 80% drop in 12-18 months. That distribution turned into unmitigated panic selling today, as both RGR and SWHC saw some enormous volume selling that took both companies down significantly. It wasn't the fact that RGR saw its biggest volume down day in years today alone, however, that has finally put a lid on the stock. It was also the fact that its primary trajectory served as the point where the acceleration took place. A gap below the primary trajectory that occurs on above average volume and ends on its lows, following a distribution pattern of some months, is an extremely high percentage pattern. Not only that, it is a pattern that is prone to significant destruction in shareholder equity over an intermediate to long-term time frame. RGR has seen its best days. The bears are now 100% in control, with nefarious intentions for the share price. Here is the technical look, starting with a long-term view to demonstrate the enormous downside volume today, followed by a short-term view to demonstrate a violation of the trajectory: click chart to...
4 CHARTS EXHIBITING THE MARKET’S PROPENSITY TOWARDS LIMITED DOWNSIDE IN THE WEEK AHEAD
The primary theme of last week's chart review was technical perfection in the markets leading to a surge beginning the week of December 17th, otherwise known as this coming week. The tight range that the Dow would fall into during this past week played out to near perfection, as the generational trajectory exerted its influence over the markets. We now have the necessary setup for a real effort at taking down this generational trajectory, which is rarely taken out on the first attempt as demonstrated this past week. For a good demonstration of the failure of first attempts take a look at June-August in relation to the trajectory here. Here is the look for the week ahead: click chart to...
6 CHARTS DEMONSTRATING TECHNICAL PERFECTION FOR THE WEEK AHEAD
During last week's review, I spoke about a market that was demonstrating highly bullish behavior through the points at which the market was choosing to consolidate. We continued that trend of technical perfection this past week. A very high probability of a significant bullish resolution to these charts lies ahead. I believe that bullish resolution begins taking shape the week of December 17th through the end of the year, with the Dow ending somewhere in the vicinity of 13,400-13,500. click chart to...
AAPL: WHY SO PRECARIOUS?
The questions about AAPL have been raining on me this weekend like my name is Destiny and I'm 3 feet away from a chrome pole. As an observer of market history, I become concerned when assets of the investor class are so heavily allocated into one idea as they seem to be in AAPL. The story never ends well. That's the bottom line. Apart from my admitted chronic skepticism of AAPL as an investment, I am willing to deliver some short to intermediate term analysis in order to clarify the picture. AAPL was an extremely accommodating investment on a technical basis as it HAD BEEN behaving in an extremely symmetrical manner for most of 2012. That symmetry allowed me to make multiple calls on AAPL throughout the year that made me look like I had a long grey beard, pointy hat with stars and a wooden cane. Well, guess what? The symmetry in AAPL is dissipating quickly. AAPL is poking its head in places it shouldn't. It is doing so frequently. It is doing so on greater volume than it should. The investment that is AAPL is becoming much more difficult to gauge than it has been for all of 2012. Here is the problem with an investment like AAPL when it becomes difficult to gauge: You can't quantify the risk. And I'm not talking about saying that AAPL is trading at 9 times 2013 earnings so it can't have more than 10% downside. That is the articulate incompetent means of gauging risk. The markets thrive on abusing those who utilize miscellaneous gauges of value to determine risk levels without looking at what price action is saying first. It is why most value managers are absolutely putrid at their chosen profession. Moving on. From a price/technical perspective what is your downside on AAPL versus upside? There is no answer to that question at this point. That is my problem with AAPL. It is not isolated to AAPL either. I will not invest in any vehicle where I cannot quantify my risk within 20 seconds of looking at the instrument. It is the first thing I look at. It is the last thing I look at. AAPL just so happens to be the Beatles of the stock market and the current generation of investors are 17 year old girls, wearing plad dresses and those funny looking pointed eyeglasses girls used to wear in the 60s. You know the ones. From a purely short-term perspective, I will say that the volatility and volume we are seeing at these levels if indicative of either (A) a change in trend back to the upside...
EXACTLY WHAT AAPL CAN AND CAN’T DO FROM THIS POINT FORWARD
I want to say this before you get to the chart: AAPL is now taking part in low probability events on a technical basis. Today's move down should not have occurred. Or rather, it was a very low probability event. When a company that previously went out of its way to behave predictably starts behaving erratically, it is a sign that the drivers of price that existed before have dissipated. This is an intermediate to long-term negative for AAPL. It goes far beyond whether AAPL will close at 520 or 580 tomorrow. It tells of a stock that may be in a period of long-term sluggish behavior.....at best. The next few days are huge from a price action perspective. click chart to...