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Option Millionaires was started in February 2008 to provide traders with information about option trading. Led by three career option traders, whose pseudonyms are JimmyBob, UraniumPintoBeans, and Vantillian, they started one of the most popular option trading communities on the web. Now, Option... More
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  • Apple – Ready To Bounce In Near Term - Targets Inside

    By Chris Diodato

    Every market technician saw it, and every technician raved about it, as Apple, the darling stock of the world, formed a bearish head and shoulders top. The breakdown began last Friday, as the market leader pierced through the bottom of the major support level at $655.

    (click to enlarge)

    Yes, the target is down at $600, but very often, this pattern will pull back, shaking out weak sellers. With bullish divergences in the RSI right now, and a very bullish candlestick pattern, it looks like it is ready to do just this.

    (click to enlarge)

    And in the daily chart, you can see the candlestick pattern, known as a hammer. This is a signal that demand has once again stepped in and has taken control in the market. It's a short term pattern with short term implications.

    (click to enlarge)

    I have the target in this chart at around $655.37. The time target would be around October 12, which conflicts with my October 23rd top prediction. Therefore, I suggest to use $655.37 as a "minimum target" for trading purposes. The second target would be at $674.62

    Now remember, these are just my thoughts for the short term. With the breakage of the head and shoulders pattern last week, the active target is $600. That's the longer term target. Here, I am just trying to forecast the fluctuations until that point.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 09 9:27 PM | Link | 3 Comments
  • Apple Looking Exhausted, But Bullish Until October 23rd!

    By Christopher Diodato

    Every time I see a commentator on CNBC talking about Apple, they always profess that the stock is invincible and every time the stock declines, there is always enough demand to create another rally. The reason that the technicians cite is that volume always increases right at the lows, which represents accumulation. Here's a chart of Apple, with the volume bars near minor bottoms highlighted in blue.

    (click to enlarge)

    Now, as we travel downward toward support again, we see that volume is increasing, but price is not moving. Even though, as I mentioned in my last newsletter, Apple is forming a bearish head and shoulders, it does not look like it will break down, yet.

    We know that volume is increasing and price has stopped declining, so that should make us slightly bullish. Also, momentum is showing strong bullish divergences. The chart is below.

    (click to enlarge)

    Of course, attempting to accomplish the so-called "impossible," my Gann analysis calls for the last top to occur on October 23rd, a few days before the broad market tops as a whole. So, now is not the time to short Apple. One more rally is in the works!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Oct 01 3:34 PM | Link | Comment!
  • As Weird As It Gets – Predicting The Market Top With Gann, Demark, And Elliott Wave Analysis

    By Chris Diodato

    In my Tuesday post and in today's post, my objective is to support my thesis that the market is going to make some sort of important top around October 22-26. In another post, I used the Demark sequential to show that the market will be very vulnerable to bullish exhaustion. Now, to explore the market with the very little known methods of W.D. Gann.

    Here's the chart of SPY (I used the ETF because I wanted gaps included. Indices don't gap). I use the "Square of 52″ and the 45 degree and 22.5 degree angles to find points of support and confluence.

    (click to enlarge)

    The market seems to respect 45 degree trendlines from market bottoms quite well. The practice of drawing those trendlines for support has been used since the early days of point & figure charting. What I consider more notable is that when an important 45 and 22.5 degree line cross, the market tends to reverse. The next cross is scheduled to be around October 24.

    Before we finish, let's show one more chart. Here's the same chart, with the Elliott Wave labels, and the time length of each of the two impulse waves, A and C, labeled.

    (click to enlarge)

    The equality point for wave C gives us a price target at 1566 on the S & P 500 on the last day of October.

    So, in summary

    • Demark Sequential says we are vulnerable to a reversal near October 26 on both monthly and weekly time frames
    • Gann angle analysis says that a key pivot will occur near October 24
    • Gann time degree analysis says that the market will top on October 31, just in time for Obama to get reelected
    • Elliott wave analysis says the top will be around 1566 on the S & P 500

    Now I definitely won't be doing this type of analysis that often, but it's just nice to sometimes get a different point of view, and especially one that you will never see on the news media. To judge this signal when the time comes, look for consolidation during the last two weeks of October and our first sell signal in the beginning of November. Until then, if you're not long, you're wrong!

    Happy trading!

    ~Christopher Diodato

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 21 9:46 AM | Link | Comment!
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