Thursday, April 2, 2015

Crunch time for [IBB] model and [AAPL] as well.

At the backlink I presented the following model.

Here is the current actual.  It is presenting with a potential double bottom and that is what most legacy traders will see - they will assume buy the dip is still in effect and that the double bottom would be a good entry point for them to load up big.  Maybe my count is wrong and maybe those traders will do well here but what I see from an EW perspective is a bull trap.  We had 5 rapid waves down into green 1 and then a clearly corrective move into green 2.  Then we had a new wave down that stopped just short of being a lower low which, had it occurred, would have told traders to sell instead of to buy.  But the apparent double bottom here would normally be a buy signal and that would be the perfect time to gap these shares down hard, perhaps a good deal harder than what I model below.

There are no certainties in this game of course but I certainly would not own IBB right now.

AAPL, my other "bubble wonderland" indicator, is in a similar technical situation according to my model.  Here is the backlink and the daily bar chart from that post is below:

Here is the current snapshot.   Note that my primary count is still per the above chart but due to recent triangular looking formation I am open to the potential for one more wave up as shown.  If this final wave were to occur it would be most satisfying from an EW perspective both in terms of the wave structure and in terms of having a throwover on the 1-3-5 line that started back in early 2008.  IFF a proper 4th wave HT forms and then breaks out its top rail, I will make the chart below my primary count.

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