March 23rd 2013: Bonds aren't bursting....yet.

I was talking bonds with a friend of mine this week and the TLT chart looked like an interesting one to discuss for the blog...

For all the talk of a) bonds being in a Fed-induced bubble and b) over-heated bond assets MUST flow into equities, the TLT chart looks bullish or perhaps more likely "not bearish".  What I mean by that is TLT looks like it's going to be trapped in a box (range) for some time.  (By the way, if anyone tells you the market MUST do something, just consider the source and the alternative).

When TLT broke the lower edge of the box with volume and FORCE in early March, I went short TLT (via long TBT) in anticipation of a larger sell off.  However, the sell-off got absolutely no traction and I quickly covered for a small loss.  What happened next is reminiscent of some of the best $SPX bottoms where price undercuts a defined support level and closes sharply higher in the same week.  After undercutting the lows, TLT bounced back into the box on better than average volume and improved FORCE....and then the following week jumped sharply in price.  This is bullish price action.

On the bullish side of the ledger, we have the following:
- Undercut of support and close above
- 5EMA and 10SMA are close to crossover (a few ticks away)
- FORCE index is green (positive)
- Volume on black bars is increasing
- Price closed above 5EMA and 10SMA
- Bullish "W" pattern on daily
- Bullish cup and handle pattern on daily
- Bullish triangle continuation pattern on daily

On the bearish side, we have the following:
- Downtrend is still in place with a series of LL's and LH's
- Gap remains open a few points below
- Volume on red bars is still high

Overall, I think odds favor TLT remaining in the current box for the next few weeks - perhaps months, but I will respect a break in either direction.

I have no position in TLT or TBT right now and don't plan on initiating one any time soon.

For more charts with alot less narrative, please see my public chart list (and the disclaimer, too!)
http://stockcharts.com/public/1109955

Here's the chart (courtesy of stockcharts.com):

March 16th 2013: Apple isn't dead yet!

For my first post on Weekly Stock Charts, I thought that I'd go over everyone's favorite stock, Apple [AAPL].

First a few words about my methods of analyzing stock charts.  As the title of this blog suggests, I mainly focus on weekly stock charts to identify areas of support and resistance areas (which I draw as boxes for convenience).  I trade those boxes based on the teachings of trend-following with a pinch of Darvas box theory and Alexander Elder layered on top.  If that last sentence made absolutely no sense, might I suggest reading 3 books as background:  Michael Covel's "Trend Following" and Nicholas Darvas' "How I Made $2M in the Stock Market" and any of the books by Alexander Elder.  Or just follow along with my posts and you'll see how I do things.

Too many people have given up Apple for dead....and it's not quite dead yet!

As the chart below illustrates, there's some bullish divergences between the FORCE index and price (FORCE is making a higher low while price made a lower low).  Elder Impulse bars are blue (neutral) - which is infinitely better than red (if you're bullish).  Resistance is at 478.81 (the top of the blue box).

So, the million dollar question is can it actually make it to that high of 478.81?

Maybe not, but I'm still playing for a bounce.  Here's why:
- Bullish divergence in FORCE index
- FORCE index is green (positive).
- Bouncing off resistance (now support) from Oct 10th 2011 weekly high of 422.
- Sentiment has become too negative after 6 months of going down

On the negative ledger, you have the following to contend with:
- Trend is still down (5EMA is lower than 10EMA), shaded red on the chart.
- No higher highs printed yet
- Price is below 5EMA
- Volume on weak bounces remains correspondingly weak.

Taken together, I think the odds for a small bullish bounce are better than 50% and certainly better than any time since September 2012, but I wouldn't count on tagging the 478.81 high just yet.

I'll revisit AAPL in a few weeks to see how it all plays out.

For more charts and disclaimer, feel free to check out my public stockcharts list:
My StockCharts Public Stock List

*** This blog post is for informational and educational purposes only and should not be misconstrued as investment advice. ***