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Can the Market Shrug Off Another Downturn in Apple?

Jan 06, 2014 8:50 am Print Print

Last week, we showed a chart that depicted a possible 6-year, low-to-low-to-high-to-high cycle.

To recap, it was six years from the March 2003 major pivot low to the March 2009 low, and it is six years from the January 2008 pivot high, when the plug was pulled, to the beginning of January 2014.

Last Week's Chart:

This weekend I came across the following:

The Lord said to Moses at Mount Sinai, "Speak to the Israelites and say to them: 'When you enter the land I am going to give you, the land itself must obseve a Sabbath to the Lord. For SIX years sow your fields, and for SIX years prune your vineyards and gather their crops. But in the seventh year the land is to have a year of Sabbath rest, a Sabbath to the Lord. Do not sow your fields or prune your vineyards. Do not reap what grows of itself or harvest the grapes of your untended vines. The land is to have a year of rest.'" - Leviticus 25:1-7

One complete rev of 360 degrees as seen on the number grid of the Square of 9 is a square. A true square is really a 6-sided cube. So, 360 degrees in time or 1 year x 6 equals a time of completion, or a cube in time.

Note that Apple (AAPL) made the turn on the decline from its all-time high on the seventh month in April 2013. AAPL left a large-range-monthly Bottoming Tail in April 2013 on the seventh month from its September 2012 peak.

AAPL Monthly Chart from 2011 to Present:

Looking at the big picture, the bull market from 1982 to 2000 ran 18 years, or 3 cycles of this 6-year period.

From the January 1995 impulse kickoff, another 18 years from January 1995 gives January 2013.

The market exploded to the upside in January 2013. This was the kickoff for the move that took the major indices over their 2007 peaks. So, we must keep an open mind to a possible continued uptrend.

That said, January 2014 also sets up as pivotal on the 6-year cycle.

The nature of a pullback in the SPX here and the first ensuing rally attempt will be important to observe and will give us much information.

The market should be on the brink of a 6-to-7 week decline. If a decline plays out and that last beyond 7 weeks, we should see a 3-month decline into the fifth anniversary, or 60-month anniversary, of the March 2009 low.

My expectation is for the low 1800 SPX area to be tested soon. The nature of that test will determine whether one more run will play out to around 1865 prior to this potential 6-to-7 week or 3-month decline.

If the current action is part of a decline that holds the 50 DMA, it could perpetuate a run to 1865.

1865 aligns to October 9, the last low. Ideally, if such a run were going to unfold and prove to be an important pivot high, I would think that it would be in the making right here right now since 1865 is 90 degrees square this week.

Checking a daily SPY, a test of 180 (1800ish SPX) looks like it's in the cards for January.

Daily SPY Chart:

1807 ties to 90 degrees down in price from the recent high. This also ties to a rising trendline connecting the October 9 low and the mid-December low. It also ties to a backtest of a Live Angle from the last breakout pivot in mid-December.

Notably, if another pivot low plays out and the SPY and the SPX turns up a run to the upper rail, both point to around 1865 or higher.

Be that as it may, an hourly SPX from the October 9 low shows a breakaway gap following 3 drives to the upper rail of a channel.

Hourly SPY Chart:

Below prior swing highs should see a test of 180ish. Below 180 indicates around 177.

The Weekly Swing Chart has turned down on the IWM. It has not done so on the SPY and the SPX. A turn down on the weeklies there would occur on trade below last week's lows. If that plays out and the SPX continues lower and accelerates lower, the indication is a test of 1800ish is in the cards.

The market has been in a persistent uptrend since the late June lows. This was coincident with a double bottom in AAPL.

In early December, we flagged a potentially important square-out in AAPL at 568 and 569, indicating some sort of interim top in AAPL.

Daily AAPL Chart:

On Friday, AAPL closed below the mid-point of its bear market retracement. From its all time 705 high to the 385 corrective low is 320 points, giving a mid-point of 545. AAPL closed at 540 on the important Friday weekly closing basis on the first week of the new year.

Is this a bad omen for the market with AAPL still being an important lynchpin of sentiment?

In addition, with Friday's large range distribution day, AAPL snapped a rising, 3-point trendline and is now perched on a large trendline, which is the bottom rail of a large channel.

Notably, AAPL's December high marked a third drive to the top of a trendline since last April's low.

AAPL is following through to the downside this morning from Friday's weakness, so it's going to be interesting to see if the broad market can shrug off a sell-off in AAPL as it did during the first half of 2013.

Form Reading Section (WUBA) 10-min and Daily Charts:

No positions in stocks mentioned.



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