Apple Analysis following new ATH (with trade profit and setups)
After the COVID drop back in March of 2020, Apple entered into a new bullish Elliot wave cycle. I believe this wave cycle entered into the 5th cycle after the correction between September and October. This smaller wave cycle appears to be completing an extended 3rd wave. Based on the previous extension impulse correction, I'd estimate the price target to be between 172-178 (Fib extensions have pretty big error tolerances, and I already closed my long trade at 171 to be safe)
This 3rd wave extension can be seen as the recent price action that set 3 consecutive all time highs within and ascending channel. After the final price target is reached, I expect AAPL to enter into a 4th wave correction and go short to around 155. If a wave 5 is confirmed I expect the final price target to be around 190 or 1.6 times the magnitude of the wave 3 price growth.
However, it is very easy to misconstrue a 3rd wave extension with an actual 5th wave (its honestly a little maddening sometimes tbh). 5th waves are notoriously hard to trade as they tend to happen near the end of a bull market and have lower overall volume relative to wave 3s. So it is entirely possible that the ascending channel is actually the peak of the 3rd wave, the wave 4 correction, and the entire 5th wave. There is some evidence to support this, as the price today has moved into the 1.2 fib extension of the wave 3 magnitude.
Apple is a powerhouse when it comes to burning people that go short on it, so I personally chose to intentional skew the outlook bullish and view the price action was a 3rd wave extension. This way as long as I'm using sound entry confirmations I wont find myself getting burned trying to trade against the titan that is Apple.
I successfully traded the last two ATHs using bullish straps with the first entry on Nov 30th before the runup to 171 with a profit of ~$550. The second entry was yesterday at around 165 to catch the runup today, and to be on the safe side I held back my greed and closed this trade at 171 for a profit around 1400 dollars. I am still holding the short leg to see if I can catch a drop today, so the realized profit is still in flux.
To summarize:
Intra-day: long with PT 172-178
Short-term: short to the 155ish range
Long-term:
Case 1: current wave 5 has 3rd wave extension and a final wave 5 within this wave pushes the price to around 190
Case 2: current wave 5 is in the 5th and final wave and the PA is due to the main wave cycle correction. Its hard to say what this bottom is since it would be driven hard by macroeconomic forces, but under the best case I would
expect to see a correction somewhere within range of the main wave 4 correction. This would be somewhere between 103 and 138. (like I said before, Apple burns people that short it, so I feel dirty even suggesting it
could go short that far. It could very well short 1/4 that and start another bull run)
Future trade set ups:
I will definitely be looking to play the up coming correction with an entry point towards the end of today or tomorrow sometime. I'll be paying attention to the completion of a head and shoulders top on the 3m timeframe.
I'll be looking to play this two ways.
1) short term short over 1-3 days using a 1-2 bearish straps with a DTE sometime next week.
2) longer term using 1-3 bearish straps with DTEs at least 14 days or more out.
Example of trade setups for both cases above:
Short term short (3m chart)
Long term short (30m chart):
Here is the longer timeframe chart showing the wave count:
Here is the wave 5 wave count showing the price target range under the assumption of a 3rd wave extension:
Here is the alternative wave 5 count showing that the current PA is well within the 1.2-1.6 fib range and very well could actually be the top.
This 3rd wave extension can be seen as the recent price action that set 3 consecutive all time highs within and ascending channel. After the final price target is reached, I expect AAPL to enter into a 4th wave correction and go short to around 155. If a wave 5 is confirmed I expect the final price target to be around 190 or 1.6 times the magnitude of the wave 3 price growth.
However, it is very easy to misconstrue a 3rd wave extension with an actual 5th wave (its honestly a little maddening sometimes tbh). 5th waves are notoriously hard to trade as they tend to happen near the end of a bull market and have lower overall volume relative to wave 3s. So it is entirely possible that the ascending channel is actually the peak of the 3rd wave, the wave 4 correction, and the entire 5th wave. There is some evidence to support this, as the price today has moved into the 1.2 fib extension of the wave 3 magnitude.
Apple is a powerhouse when it comes to burning people that go short on it, so I personally chose to intentional skew the outlook bullish and view the price action was a 3rd wave extension. This way as long as I'm using sound entry confirmations I wont find myself getting burned trying to trade against the titan that is Apple.
I successfully traded the last two ATHs using bullish straps with the first entry on Nov 30th before the runup to 171 with a profit of ~$550. The second entry was yesterday at around 165 to catch the runup today, and to be on the safe side I held back my greed and closed this trade at 171 for a profit around 1400 dollars. I am still holding the short leg to see if I can catch a drop today, so the realized profit is still in flux.
To summarize:
Intra-day: long with PT 172-178
Short-term: short to the 155ish range
Long-term:
Case 1: current wave 5 has 3rd wave extension and a final wave 5 within this wave pushes the price to around 190
Case 2: current wave 5 is in the 5th and final wave and the PA is due to the main wave cycle correction. Its hard to say what this bottom is since it would be driven hard by macroeconomic forces, but under the best case I would
expect to see a correction somewhere within range of the main wave 4 correction. This would be somewhere between 103 and 138. (like I said before, Apple burns people that short it, so I feel dirty even suggesting it
could go short that far. It could very well short 1/4 that and start another bull run)
Future trade set ups:
I will definitely be looking to play the up coming correction with an entry point towards the end of today or tomorrow sometime. I'll be paying attention to the completion of a head and shoulders top on the 3m timeframe.
I'll be looking to play this two ways.
1) short term short over 1-3 days using a 1-2 bearish straps with a DTE sometime next week.
2) longer term using 1-3 bearish straps with DTEs at least 14 days or more out.
Example of trade setups for both cases above:
Short term short (3m chart)
Here is the longer timeframe chart showing the wave count:
Here is the wave 5 wave count showing the price target range under the assumption of a 3rd wave extension:
Here is the alternative wave 5 count showing that the current PA is well within the 1.2-1.6 fib range and very well could actually be the top.
Comment:
I tried to run a bearish strap overnight on the short term pullback but the timing was just a little off. I cut the short leg immediately at market open and was able to generate an overall profit on the long leg run-up.
strap:
long leg: 172.5 12/17 call
short leg: 172.5 12/17 put
total profit: 203
I should have logged this yesterday, since I'm not remembering exactly what went on. But I'm pretty sure I moved into the bearish strap from a straddle. The idea was that AAPL definitely still had more strong bullish movement but the timing is tricky going into the post and pre markets. So, I started a straddle with the intention of converting it to a bearish or bullish strap at the end of the day. I untimely chose the wrong direction, but good management on the strap allowed an overall profit to be made.
strap:
long leg: 172.5 12/17 call
short leg: 172.5 12/17 put
total profit: 203
I should have logged this yesterday, since I'm not remembering exactly what went on. But I'm pretty sure I moved into the bearish strap from a straddle. The idea was that AAPL definitely still had more strong bullish movement but the timing is tricky going into the post and pre markets. So, I started a straddle with the intention of converting it to a bearish or bullish strap at the end of the day. I untimely chose the wrong direction, but good management on the strap allowed an overall profit to be made.
Trade active:
Timing the top of a major wave cycle is pretty tricky, so I'm trying a new strategy. Over the last two days I've increased my positioning in a 12/23 strangle with 172.5 puts and 175 calls. The returns have stayed mostly neutral through the price action thanks to the DCAing but the premiums obviously still skew bullish.
The plan is to cut all but one contract on the long leg at the top and hold the short leg through the correction. I still don't have a good hard technical trigger for this timing, but I'm hoping it becomes clear nearer the top.
The plan is to cut all but one contract on the long leg at the top and hold the short leg through the correction. I still don't have a good hard technical trigger for this timing, but I'm hoping it becomes clear nearer the top.
Looking at the chart, I see the potential for another set of ATHs during post and pre-market. Past behavior is not always indicative of future events, but mass psychology and widespread algorithmic trading makes it a pretty damn good indicator a lot of the time.
In this chart you can see extremely similar price to momentum correlation. I personally believe this is mostly due to the fractal nature of Elliot waves, but either way there seems to be room for a new high between 172 and 175. So I'll hold off on the short entry for sometime tomorrow.