today. Most indices traded well in the upper end of yesterday\u2019s range. The SPX formed a double bottom at the 897 level and closed strong.<\/p>\n
However as I write this post the S&P futures are down 11 points. <\/p>\n
It seems this was a result of a news item that Bank of America needs $34B in new capital based on the stress test results. Though BAC has declined to comment, I expect a distribution day tomorrow with traders now having ample reason to take profits. <\/p>\n
<\/p>\n
In today\u2019s post I will analyze two charts, one for Apple and for the 30 year treasury (TLT).<\/p>\n
Apple: Forming a Megaphone Top<\/strong><\/p>\n Apple\u2019s stock has been on a tear since the rally began and closed higher today. <\/p>\n However today it formed an interesting pattern called the Broadening Top or a Megaphone<\/a> Pattern. This is a pattern which marks a reversal at the top of a long bullish run. <\/p>\n If the weakness in the equity market continues into tomorrow\u2019s session, I expect the breakdown to occur tomorrow to complete the pattern. I commented on twitter as this pattern developed throughout the day. I noticed it forming during the afternoon and <\/p>\n the pattern continued to follow a text-book pattern till the close of the day. Based on the pattern, Apple should first reach a downside target of around 131.20, and then assuming the lower trend line breaks, go down to touch 130, or even lower to 129.60 (from a pure pattern perspective).<\/p>\n You can follow my twitter updates on my blog also.<\/p>\n Long Bond (30 year): Poised to Break Downtrend<\/strong><\/p>\n As I have posted I have a long position in the TLT which I have kept during the sell-off; I had hedged a portion with TBT calls which I no longer hold. As the chart shows for ZB, the 30year bond futures show, the price has formed some sort of a bottom and is poised to break back up. <\/p>\n As I write this article the futures are trading at 122\u2019265, above the resistance line in the chart. <\/p>\n I expect the long bond to retrace at least to the 123\u2019065 level (23.6% retracement) or even to the 38.2% level (124\u2019055) before this up move is done. <\/p>\n If the BAC story is true risk appetite is going to wane a bit, and yields should pull back. <\/p>\n This is likely to be good for the green-shoots <\/p>\n to continue growing. <\/p>\n <\/p>\n My Portfolio<\/strong><\/p>\n I have built a short position in Apple today via outright equity shorts and puts. I expect to book profits on any weakness tomorrow. <\/p>\n <\/p>\n I will also start scaling out of my TLT positions if this surge in bonds continues. I did scale out my <\/p>\n IYR puts today and will continue to do so on any further weakness. <\/p>\n <\/p>\n I am hoping that we pull back to the 875 level on the S&P, test it. <\/p>\n A test of that level will reassure a lot of bulls and also weaken the bearish sentiment. <\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" The equity markets had an inside day 2004 10 04 zithromax zithromax today. Most indices traded well in the upper end of yesterday\u2019s range. The SPX formed a double bottom at the 897 level and closed strong. However as I … Continue reading
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\n![\"\"](\"http:\/\/content.screencast.com\/users\/aviat72\/folders\/Jing\/media\/e834344f-5b7c-485f-b4b3-c5d89813587c\/ZBChart.png\")
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