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Monday, March 19, 2012

All AAPL All The Time

Normally the Monday after options expiration is a low volume down day. We got the low volume, but in an abnormal market, we went even further up. Conservatively I have 1425 as the top of this range, and liberally I have about 1460 as the top. Neither might be, as it seems to me that on this leg up, we are seeing selling into strength. If it weren't for AAPL and it's 31 million shares traded, the volume would have been overwhelmingly down today. While we had plenty of stocks advancing today, very few were leading stocks and none of the breakouts were. Most of the strongest stocks in the market were stocks that were among the weakest going into January. That is not where the big money boys go: they are sitting in stocks like AAPL preparing to sell to the CNBC suckers. Things could change tomorrow, and the boys start buying again, but so far I see no signs of it.

The price relative line on the Nasdaq is once again at a new high, and we are seeing the Nasdaq start leading again. If that is the case, there will be plenty of strength to sell into. Notice that here CMF is not rising despite a pretty hefty move off the last pullback. Maybe it means nothing (CMF is not a terribly reliable indicator), but I doubt it.

Price relative on the Dow has now resumed it's down trend, another bullish indicator. CMF, however, is also dropping, and ATR has dropped to such an extreme low level that it is starting to indicate a dangerous level of complacency. If I was an options trader, I would be loading up on out of the money puts - cheap and at this point probably not that risky.

The Russell 2000 broke out of it's range, which is about the only positive thing I can say here. The price relative line is again trending sideways, which is not a negative, but not what you want to see after a nearly two week rally. This also shows a lack of buying pressure on the way up (I hate using volume on an ETF as a proxy, but with the Russell 2000 you don't have a choice), and despite the new high, looks like it is hitting resistance here. This isn't nearly as bullish as a breakout might suggest.

AAPL is almost single handedly holding up this market, and that won't go on forever. In fact, I think it is going to stop very soon.

I will have the new highs update shortly.

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