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Are Apple and Amazon Telegraphing a Market Inflection Point?

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JEFF COOPER'S TECHNICAL BREAKDOWN
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Two of the bulls' darlings, Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL), scored lows in late November 2008 ahead of the market's March 2009 price low. Is it possible that both stocks, having satisfied some interesting technicals, are now pointing to a significant inflection point in the S&P 500 (INDEXSP:.INX)?

On Wednesday, we showed a monthly Amazon that showed some pretty plain vanilla technical analysis pointing to a convergence of resistance around current levels.

Monthly Amazon Chart:



A Square of 9 Chart underscores this analysis.


Click to enlarge

At around 395, Amazon will have satisfied a move of 7 revs up of 360 degrees in price from its late November 2008 low of 34-35.

As you know, 7 was considered by W.D. Gann to be a number of completion (in time or price), which often played out in panics. These could be waterfall declines or upside blow-offs.

This cycle of 7 revs, or squares up, in price is occurring 1800 degrees in time (5 years) from low, so there are some compelling time and price harmonics and vibrations here.

At the very least, the normal expectation would be for a decline to the bottom rail of the blue channel, which ties to around 300 for Amazon.

However, the major indices and Amazon are in runaway mode, so a throw-over of the convergence of the 3 trendlines around 395 cannot be ruled out.

At the same time, as noted in this space, Apple was on a trajectory to satisfy a 50% retrace of its bear market. This 50% retrace was satisfied on Wednesday at 545.

What is interesting is that late November is 90 degrees square a price of 546-547.

A daily Apple chart from the June low shows that at a price just above 545, Apple will satisfy a third tag of a rising trendline as well as a short-term Live Angle. So, there is a cluster of technical resistance at current levels in Apple as well as in Amazon.

Daily Apple Chart:



In addition, a Running Inverse Head & Shoulders in Apple also projects to 546-547.

Note that there was a time and price square-out at the late June low in Apple, with 389 aligning and vectoring late June.

Apple Square of 9 Chart:


Click to enlarge

Are these "vibrations" merely happenstance?

The important thing to remember is that while all major and intermediate highs and lows are time and price square-outs, not all square-outs are major or intermediate highs and lows. It is the price behavior subsequent to the setup that tells the tale. So, it is with all technical considerations.

Of course, continued strength in Apple may imply a date with destiny back to the old high or higher. But, the normal expectation would be for a consolidation or reaction from around current levels.

Conclusion: The fact that these two heavy weight stocks in the index are both at potential inflection points in tandem adds weight to the idea of a possible turning point in the markets. Importantly, counting from the recent big October 9 pivot low on the 5-and-10-year anniversaries of the 2002 bear market low and the 2007 historic bull market top, the end of November and early December also mark the end of the Gann 49-55-day Panic Zone. As offered above, W.D. Gann considered 7 the number of change, with change often times being abrupt and bringing about panic conditions. This so-called Gann Panic Zone ties to 7 squared days or 49 days. Note that the bear market decline in Apple played out over SEVEN months. This Gann window can tie to waterfall declines (as it did in both 1929 and 1987, to mention 2 quite dramatic examples) OR to upside "crashes."

The S&P 500 has advanced a Fibonacci fractal 162 points since the October 9 low (1646 to 1808). This echoes the near 200-point explosion in a matter of weeks into the big March 2000 top. The index has not quite completed a full 360-degree move up in price from that 1646 low; however, it is interesting that 162 is 90 degrees square the date of the low, October 9. The RANGE in points from the low may be squaring out right here.

Moreover, notably, the S&P 2009 price low at 667 aligns and vibrates off the first week of December with the first week of December being 90 degrees square March 6, 2009.

S&P 500 Square of 9 Chart:


Click to enlarge

While the consensus seems to be that it is a foregone conclusion that the market will continue to advance into the end of the year, it is worth remembering that what most think likely is usually not likely to play out.

Monday morning's report will further expand on the current time and price symmetries in the market and how they tie to big picture cycles and on what to look for should momentum show up past the current time frame and price levels.

If you would like to own a physical Square of 9 Wheel and be instructed on its use, please contact Jeff Cooper at cooper@minyanville.com.

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POSITION:  No positions in stocks mentioned.

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