Option Milliona...'s  Instablog

By Chris Diodato

It's Friday, and the end of another exciting week of trading is upon us. Looking through my stock screeners, I found that Western Union (WU), looked ready to break out to the up side.

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Now this is a short-term trade, as I expect the broad market to top very soon, and with that, most stocks. We are looking for a quick 7.5% gain to walk away with. Take a look at this video for the analysis and the strategy.

Happy trading!

~Chris Diodato

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

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.

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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.

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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.

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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.

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.

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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.

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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.