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What Does the 4th Anniversary of the 2009 Low Indicate?
March 5, 2013 08:25 AM
JEFF COOPER TALKS TECHNICALS
I am having an affair with the random computer
I have an existential map. It has ‘You are here’ written all over it.
Stocks drifted most of the day until what looks like a "Market On Close" buy program goosed the market to get it near the highs with the usual suspects doing the heavy lifting.
Money was concentrated in the top 10 heavyweights which were used to mark up the market, which is how you know a buy program is at work.
) is the new
), and was jacked higher to offset another sharp sell day in AAPL.
There’s only one thing worse than watching your beloved stock go down, and that’s watching it go down as the market is ripping… especially as the market is verging on new highs. There are tears on the tape amongst AAPL buy and holders as I suspect many market participants have added to the name on the way down, particularly in February. As mentioned in this space last year, my presumption has been that more money could be lost on the way down in AAPL than was ever made on the way up.
Years from now, speculators will be pointing to the persistent lack of relative strength in AAPL versus the run toward record highs in the popular indices. Relative strength is one of the best indicators there is. When it is apparent on a PERSISTENT basis (as has been the case with AAPL versus the broad market) as opposed to a few days, it is a great indicator.
As noted the other day, correlation kills: if you shorted the
) based on the presumption that AAPL’s bear market would correlate to a steep selloff in the
(INDEXSP:.INX), it’s not working out. If you bought AAPL in 2013 on the presumption that continued strength in the SPY would correlate to a rally in AAPL, you’re in pain.
Ultimately, the persistent decline in AAPL may prove to be a sign of a market top, but as they say, timing is everything.
The current negative divergence with AAPL trending sharply south and the market trending notably north may ULTIMATELY prove to be another “Jaws of Death” pattern similar to the ‘jaws’ between the Emini S&P 500 and Dr. Copper shown in an alert yesterday:
Click to enlarge
We will be forwarding a technical take on AAPL in an alert this morning.
Another ‘jaws’ in the market was Monday’s Shanghai Surprise and how the market shrugged off the steep selloff in Shanghai and the coming deflationary collapse in China.
Similarly, the market shrugged off the recent resurgence of issues in the Euro Zone and Italian elections (albeit after the worst session of the year a week ago Monday). This time market participants weren’t having or hearing any of it as the bulls turned sour to sweet in spite of or perhaps because of the tightening news out of China. The market is hyperventilating now like Fay Wray in the palm of King Kong atop the Empire State Building as single-engine bears pelt the beast with bullets. He seems impervious. Until he’s not. You don’t want to be reading the conga line of bullish pundits with your head stuck in the
Wall Street Journal
as you walk down 5th avenue when Kong topples.
Yesterday saw a little change in character in the market. Every Friday this year saw a nice rally with the following Monday marking a decline. Yesterday’s open looked like a repeat until ‘someone’ put on an MOC buy program. This change in character may indicate that the run for 1550 or even a record high is nigh. Remember, our presumption since the major November low has been that the
Mother of All Short Squeezes
was going to be unleased with the likelihood of a major high in February near 1550 S&P or alternatively in March, possibly to as high as 1600.
If the market remains strong through Turnaround Tuesday with the S&P remaining above 1520, it is probably an indication of a surge to what I think will be a top, prior to at least a 10-20% correction.
If the market remains strong through Tuesday with the S&P remaining above 1520 and especially 1510, it probably indicates a move up into this Friday and perhaps the following Friday’s quadruple witching options expiration.
Clearly, institutions don’t want to sell here unless they have to and would like to try to go for record highs for quarter-end to make their year.
There are plenty of ‘reasons’ to be bearish here, but this is not a tape to be too opinionated about. Despite our view that a significant top is being carved out, we trade from the long side (as well as the short side) as to our swing picks and day picks offered in the nightly report of the DMR.
This is an advantage traders have over institutions: we are able to get in and out quickly with our capital.
We’ve walked through the 13-year cycle several times. Many stocks topped between March 6 to 8 in 2000 with the S&P going on to top out on March 24.
Most players give short shrift to the notion that anniversary dates are important; however, it is worth mentioning that October 10/11 was the major low in 2002 and October 10/11 was the historic high in 2007 five years after.
March 6 was the major low in 2009. Is it possible this week will mark a major high FOUR years after?
It is also worth mentioning that March 12, 2003 marked a higher low and a kickoff to a FOUR-YEAR RUNUP.
W.D. Gann put a lot of importance on anniversary dates.
Today’s opening range and first hour probably holds the key to whether the S&P/DJIA are going to surge right from here to record recovery highs. If so, 1547 is opposite March 6 on the Square of 9 Calculator. So this is something to watch for if it plays out. This week also aligns with the 1468-1474 range which ties to last fall's high. Consequently, this week’s anniversary shows a cluster of two potentially major time/price square-outs.
We will look to go long
) if the S&P approaches 1550 and shows a reversal. Alternatively, I want to be short on an authoritative break of 1488. This ties to the recent whiplash low. Remember that 1488 is 540 degrees (360 +180) up from last year’s June low. This proved to be formidable support and likewise, a break of 1488 should issue an important sell signal. In addition to being the anniversary of the 2009 low, this week is 270 degrees (9 months) in time from the early June 2012 low and roughly 180 degrees (6 months) from last September’s high. Clusters of time/price harmonics increase the odds of a meaningful turning point.
Form Reading Section
Editor's Note: This article is a free edition of
Jeff Cooper's Daily Market Report
. For a two-week FREE trial of his daily commentary and nightly day and swing trading picks,
No positions in stocks mentioned.
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