This chart is for a nice comment I received from one of you. The reader is thinking of AAPL puts. On a side note, it was announced yesterday that AAPL was/ is the worst performing DOW30 stock over the past one year (down 16%). Always use caution and be smart, LIKE THE FOX.
The above chart is from Don's toolbox. Yes, I am bearish on AAPL. I have published a TLW (Traffic Light Warning) for AAPL in past articles.
I also maintain that you should use your X axis (TIME) and well as your Y axis (PRICE). This should give you an edge.
BUT WHAT ABOUT FIBONACCI CIRCLES? I like to use them in combination with the long blue vertical Fibonacci time cycles. Here is how:
Use the Fibonacci time cycles to project anticipated key event dates. AT THE SAME TIME, add Fibonacci circles and see if your anticipated key event dates match up. Yes, like in cowboy days, "CIRCLE THE WAGONS!" Lets see how this works using indicators we already know.....
At the "Fib Start" (above, bold red, March of 2015), do you notice an impulse leg peak and the phase energy (top red and green indicator) also at a peak? NOTE: the impulse leg peaked at the Fib circle 2.618. This was followed by FIB 1, which was an intermediate reversal.
FIB 2 was an impulse leg peak, phase energy peak, and the long blue X Axis Fib time cycle MATCHED THE FIB CIRCLE at 2.618.
FIB 3 indicated a phase energy peak (top indicator), as well as a red conversion line cloud downside reversal. FIB 5 was just before September of 2015, and it converged at the decline of the phase energy. Please note at the intersection of FIB 5 (blue vertical) and Fib circle 2.618, the cloud reversed downward, the alligator reversed downward, and the red cloud conversion line and thick black Ki Jen-Sen cloud baseline headed SHARPLY LOWER.(This reversal ended very near the 2.618 Fibonacci circle in late August of 2015). FIB 8 was at an impulse leg peak and a reversal in phase energy.
PLEASE NOTE THE BEGINNING OF YEAR 2016. You can clearly see the double AAPL bottom (at the same time the market had a double bottom), and please note that AAPL FOLLOWED THE 3.618 FIBONACCI CIRCLE UP almost perfectly from the start of March 2016. FIB 13: Now we are at the intersection of Fib (vertical blue line) 13 and the Fibonacci Circle of 3.618 (two fibs converge). At this convergence AAPL has turned lower, the alligator jaws are feeding down, THE PHASE ENERGY (TOP INDICATOR) is very weak. BASED ON THE WEIGHT OF THE EVIDENCE, AAPL is in a long term down cycle. Some may argue that (with earnings to be announced) the price of the stock already has weakness figured in. This may be true, and AAPL could spike higher, but I don't think so.
A word of caution: if you plan to buy AAPL puts, the implied volatility is almost 4.5%, which means the put premiums are a bit rich. This also means that at-the-money puts must have AAPL drop almost $5.00 before you break even. (Just want to remind you).
My goal here is not to bash AAPL. My goal is to help you to understand that the markets are not random. Price and time cycles repeat, over and over. Remember, the markets are forever a humbling experience. I will close this article with a quote from Tennessee Williams: “You can be young without money but you can’t be old without it.” (in other words, trade wisely).
I hope this has been informative, helpful, and entertaining. May all of your trades go well. Don.
The above chart is from Don's toolbox. Yes, I am bearish on AAPL. I have published a TLW (Traffic Light Warning) for AAPL in past articles.
I also maintain that you should use your X axis (TIME) and well as your Y axis (PRICE). This should give you an edge.
BUT WHAT ABOUT FIBONACCI CIRCLES? I like to use them in combination with the long blue vertical Fibonacci time cycles. Here is how:
Use the Fibonacci time cycles to project anticipated key event dates. AT THE SAME TIME, add Fibonacci circles and see if your anticipated key event dates match up. Yes, like in cowboy days, "CIRCLE THE WAGONS!" Lets see how this works using indicators we already know.....
At the "Fib Start" (above, bold red, March of 2015), do you notice an impulse leg peak and the phase energy (top red and green indicator) also at a peak? NOTE: the impulse leg peaked at the Fib circle 2.618. This was followed by FIB 1, which was an intermediate reversal.
FIB 2 was an impulse leg peak, phase energy peak, and the long blue X Axis Fib time cycle MATCHED THE FIB CIRCLE at 2.618.
FIB 3 indicated a phase energy peak (top indicator), as well as a red conversion line cloud downside reversal. FIB 5 was just before September of 2015, and it converged at the decline of the phase energy. Please note at the intersection of FIB 5 (blue vertical) and Fib circle 2.618, the cloud reversed downward, the alligator reversed downward, and the red cloud conversion line and thick black Ki Jen-Sen cloud baseline headed SHARPLY LOWER.(This reversal ended very near the 2.618 Fibonacci circle in late August of 2015). FIB 8 was at an impulse leg peak and a reversal in phase energy.
PLEASE NOTE THE BEGINNING OF YEAR 2016. You can clearly see the double AAPL bottom (at the same time the market had a double bottom), and please note that AAPL FOLLOWED THE 3.618 FIBONACCI CIRCLE UP almost perfectly from the start of March 2016. FIB 13: Now we are at the intersection of Fib (vertical blue line) 13 and the Fibonacci Circle of 3.618 (two fibs converge). At this convergence AAPL has turned lower, the alligator jaws are feeding down, THE PHASE ENERGY (TOP INDICATOR) is very weak. BASED ON THE WEIGHT OF THE EVIDENCE, AAPL is in a long term down cycle. Some may argue that (with earnings to be announced) the price of the stock already has weakness figured in. This may be true, and AAPL could spike higher, but I don't think so.
A word of caution: if you plan to buy AAPL puts, the implied volatility is almost 4.5%, which means the put premiums are a bit rich. This also means that at-the-money puts must have AAPL drop almost $5.00 before you break even. (Just want to remind you).
My goal here is not to bash AAPL. My goal is to help you to understand that the markets are not random. Price and time cycles repeat, over and over. Remember, the markets are forever a humbling experience. I will close this article with a quote from Tennessee Williams: “You can be young without money but you can’t be old without it.” (in other words, trade wisely).
I hope this has been informative, helpful, and entertaining. May all of your trades go well. Don.