Bullish Cross Live


1. The Bullish Cross Apple Model Portfolio
See portfolio.
Enter Portfolio Here

2. The Bullish Cross SPY Model Portfolio
1. Short SPY @ $149.65 x 10,000 Shares
Enter Portfolio Here

3. The Bullish Cross Long-Term Portfolio
Please see the portfolio.
Enter Portfolio Here

4. The Apple Common Stock Model Portfolio
1. Apple Long-Term Position: 1,175 shares x $451.71 = $530,759.25
2. Apple Trading Position: None.
Cash = $588,326.90

5. The BC 3-Year Recovery Plan Model Portfolio
1. Apple January  2014 $550 - $600 Call-Spread at $18.85 x 53 contracts.
Cash = $95.00

6. The BC 2-Year Recovery Plan Model Portfolio
1. Apple January 2014 $600 - $700 Call-Spread at $24.15 x 40 contracts
Cash = $3,400.00

7. The BC 1-Year Recovery Plan Model Portfolio #1
1. Apple April 2013 $580 - $600 Call-Spread at $4.65 x 200 contracts
Cash = $7,000.00

8. The BC 1-Year Recovery Plan Model Portfolio #2
1. Apple July 2013 $600 - $620 Call-Spread at $4.55 x 210 Contracts
Cash = $4,450.00

9. The BC 1-Year Recovery Plan Model Portfolio #3
1. Apple January 2014 $900 - $1000 Call-Spread @ $2.92 x 342 Contracts
Cash = $136.00
Positions "On Watch" are those positions which we are considering. It doesn't mean we are taking these positions for sure. We are just entertaining the idea.

1. The Bullish Cross Apple Model Portfolio

2. The Bullish Cross SPY Model Portfolio

3. The Bullish Cross Long-Term Portfolio

4. The Apple Common Stock Model Portfolio
THE LIVE BLOG 9:30 AM - 4:00 PM

12:00 AM -- over the weekend, I spent a good amount of time putting together the Apple postmortem that I had indicated would be published around mid-February. The reason I waited to publish this is to reflect on the Apple correction along with the different theories for why the stock sold-off and the different hints that may have been present before the crash transpired. I was debating publishing the postmortem in parts, but I have decided it would be far better to put it out as one piece as this is optimally read in one sitting. It is an incredibly long piece at this point. As of tonight (Monday night at 11:41 PM) it is a little over 6600 words. I'm going to try to get this out as soon as possible and will update as it progresses. Hopefully it will be done by Tuesday night.

9:25 AM -- we left off on Friday with the SPY setting up a potential head & shoulders pattern. As you can see below, the SPY set-up a sort of neck-line at the $151.50 area and could be in the process of forming its right shoulder. See below:

We also had a second reversal day in a row on Friday for the SPY which historically is an indication that momentum is starting to slow down quite dramatically. Also, Apple had its fourth down day in a row on Friday which marks only the second time during this correction where the stock had closed in the red four days in a row.

However, we did see Apple break down from a bearish symmetrical triangle and it lost support at $463. So we could see some follow through today on that breakdown. See below:

11:01 AM -- Apple is getting oversold now both on the ChiOsc and RSI. It's not really at extremes though and could see more downside ahead. The key areas of support are $450 and $440. If Apple did push down to the $440 level it would definitely hit extremes. Most likely we will see a significant rebound starting anywhere from where Apple is now down to $440. Most likely it will be at the very least a $20-$30 rebound. So from $450, Apple could easily go back up to test the $470 level. And then from there it will largely depend on whether Apple could finally catch a bid. It's been essentially five months now of straight selling. That's quite a long period of time for such a downtrend.

Now if Apple does catch a bid here in the $455 area, then technically it will still be in an uptrend from the $435 lows. So we could end up seeing a re-test of the highs or even a push for new highs.

As the broader market is concerned, the SPY technically made new highs today invalidating the H&S set-up. That being said, we do have the $VIX in the green today which in the past has at least indicated a near-term pull-back. Also, each new push we're seeing on the SPY is becoming progressively weaker. There are also quite a few key indicators now arguing for a top. Trading the SPY for a broader and larger move takes tremendous patience. From both a time and size perspective, this rally is obviously pushing the envelope. And as we explained last week, the SPY has at the very least given up half of every single rally we've seen over the decade. Every rally from the financial crisis has seen at a minimum a 50% retracement if not a full retracement in a few cases. So it's important to understand that we're trading the broader trend for larger gains here. And we will trade the next melt-up for the same thing (provided the SPY doesn't lose key support at $140.00 and $125.00).

1:02 PM -- since reaching oversold territory, Apple has rebounded over the past few hours. It's not clear whether the stock is taking a breather ahead of a third leg down or if this is the start of an extended rebound. If it's the latter, then we need to see the stock continue to push higher throughout the day to close near the highs of the day. That would mark a reversal on the session and would likely lead to more upside pressure in the near-term. See below:

4:00 PM -- today marks the fifth consecutive session that Apple has closed in red which is a first for this correction/crash from $700 a share. Yet, we did see a sizable reversal on the day and normally we should see some continuation on that reversal. See below:

Right now, we're just in wait mode as the tail-end of this rally comes to a close. This last grind that we've seen from $150 up makes things very stretched. We're also seeing a lot of leading indicators point to both a top and to a pretty sizable correction on the next move down.

46 responses to “Bullish Cross Live

  1. No need to write 6600 words to tell things pretty evident and which could be done with a few words that many of us will be looking for.

  2. Andy, this is critically important to get out ASAP. I would welcome it in it’s current state..even if incomplete

  3. Respectively disagree with the above posts. If the answer is a foregone conclusion, there’s little value in rehashing it. I appreciate that this is done in a rigorous manner. Take your time Andy.


  4. Shawn O'Connell (Shoc13)

    Quoted from Cobra’s free weekend updated;

    “It’s one of the most widespread Wall Street clichés: “Never sell a dull market short,” meaning that it’s supposedly dangerous going short in a market that’s doing nothing. Well, how good is this advice? From October 3, 1928 through February 7, 2011, comparing the performance of the Dow Jones Industrial Index (DJII) vs. normal and abnormal volatility, with volatility defined as the percentage spread between the intra-day high and low, when the volatility index was greater than 20% above a 1-year average, the DJII gained at a 13.4% annualized rate of return. When volatility was normal, which was around two-thirds of the time, the DJII gained a fairly normal amount, 3.5%. But when volatility was 20% less than a 1-year average, the DJII gained a miniscule 2.7%. So the Wall Street cliché, “Never sell a dull market short” is simply wrong. In fact, it’s the best type of market to sell short, all other things being equal.”

  5. Google should have apple doubled up by the end of February.

  6. Bullish Cross home page:

    Buy Google or Apple? The answer is simple
    Tuesday, October 23, 2012
    By Andy M. Zaky

    • Saw this tweet this morning from @CNBCnow

      Apple’s Pain = Google’s Gain? There’s an almost perfect symmetric divergence betw. $GOOG & $AAPL in past 3 months: http://t.co/8PA82x2r

    • Man was this article ever wrong….WOW

      • Well… I think the answer’s a little more complicated than that. A lot of that article is probably right in the long run. In the short term (3-4 months) things look ugly, but let’s come back in a year or so. GOOG will have dropped and AAPL will be up.

        • No. Title says it all as did Andy’s trades and comments. Who cares about the longrun when we were all in short term option plays. He was dead wrong..Let’s see the writeup tonight. I for one want a nice looong writeup.

          • I’m not defending his strategy or all of the conclusions in the article. But I am saying that I still think a fair amount of what’s in the article is actually correct.

  7. we’re fucked.

    • Only positive is that we have to be approaching the magic -4M on the 60min chiOsc. The $20-$30 rebound should bust Apple through the longer term downtrend line. Every week the line gets lower.

  8. Losing patience with spy short.

  9. I’ve got GREEN this morning! Hurray :) Pre-Financial crisis I sold some PUTS and got my ass kicked during the insuing financial melt down. I swore I would NEVER touch a Put again then after this recent slide down, after I got my ass kicked again on our Call Spreads, I finally realized the difference between being Bullish about Apple Computer and Bullish about AAPL. Last night after reading some KayKim, I broke the ice and placed an order. Bought ONE (1) Put Spread. This is a major break the ice for me as I usually do like 50 or 100 contracts. I never thought I would be giddy over one stupid Put. How do you eat an elephant? one bite at a time!

  10. GOOG for the win! 800 today, 1000 by the end of the year? 10000?

  11. Gold and silver went just into very oversold territory.

  12. Andy,
    I look forward to your post-mortem thesis. I would not rush it at this point, instead create the best document you can. My hope is to understand what happened in the context of all that you have previously taught about T/A. I think we need to understand which components of your techinical analysis methodology you are re-thinking and why. I hope you have an entire section on how strong trends alter the use of overbought/oversold and momentum indicators. I believe we experienced a breakdown (or a “blind spot”) in our ability to interpret the influence of the recent strong trends (up – a year ago, and down now) on these indicators. It seems that this is one of the most difficult aspects of T/A.
    I don’t think the lesson to be learned here has much to do with Apple’s fundamentals. They really haven’t changed in any significant way. What did dramatically change is the sentiment and the perception of Apple – which T/A should have been able to detect, and our methodology should have protected us from such extreme losses. Thanks. -Bert

    • Jonathan Theodore

      What about the collapse in EPS growth? I think there is a definite correlation between that and the price action. The real ‘collapse’, beyond a mere correction, began only after the shitty January guidance, when analysts began lowering their estimates

      • I totally agree Jonathan. If AAPL is to repair itself, it will probably take a few better earnings reports to confirm the future trend. 80% cash now

  13. Shawn O'Connell (Shoc13)

    If market closes above 153 (SPY), what are the next levels to watch?

  14. Jonathan Theodore

    I get why apple has been hammered, but I don’t understand why google is performing so well on okish earnings

  15. Looks like AAPL bear flag to me.

  16. Last time AAPL was down five sesions in a row it rallied 40 points over the next three days.

  17. close up you bitch!

  18. archibaldtuttle

    I really don’t understand what Andy is predicting here: a drop in the SPY along with a big bounce in AAPL? I know he’s talking his book and just predicting based on the positions he holds, but I really don’t see how such a thing would come to pass with the current sentiment.

    • I don’t see where he says there is going to be a big bounce for aapl, just he sees a continuation of the reversal from today. He doesn’t give a timeline for SPY turning over either, just that it’s stretched and due for a dip. It’s been stretched for more than a month now. I’m trading on adave’s analysis – a last push up for aapl heading into March and then a breakdown to test the lows. Maybe that will coincide with a significant SPY pullback.

      • archibaldtuttle

        He said he’s expecting a significant bear market rally for AAPL up to around 550.

        • Well, I don’t know much. But if it was going to rally that much as a bear market rally, seems we could short it on the way back down. Or something.

        • Okay you mean he has been saying that recently- I haven’t been reading as closely lately as before when I had more money. $550 – is a fib retracement enough of a reason to get there? Nansen tweeted something similar.