The $500 level in AAPL is massive support. This area has been tested two times before and considering yesterday’s range (the prices AAPL traded at during the day) was low, maybe AAPL put in a short-term bottom. The average true range in AAPL over a 14-day period is $13.05; we were below this yesterday. Yesterday’s candle was also a doji; this may indicate that the sellers were unable to extend prices lower and confirm a short-term bottom thesis.

This action also puts us at an interesting risk/reward level. AAPL may rally about 6% to come back up to the hypotenuse of the triangle and test the 50-day moving average and the risk being a few bucks under $500. However with quarterly results coming up soon, all technical indicators may become irrelevant, as fundamentals will trump trading action.

The analyst community is currently estimating that shares will hit $734. EPS for the quarterly release in about 7 trading days is at about $13.50 and for the current year around $49.00. The median PE for next fiscal year is 10.5 and next year’s estimates are about $57.00.

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to…

Author

salerno.mark.a@gmail.com‘

Paper sold 7038 RDN Jan 6 Calls for $.25 (2.6 times usual volume) when stock was trading $6.11

Paper bought 1638 UNH Feb 55 Calls for $.52 when stock was trading $52.76

Paper bought 20,000 STZ Feb 57.5-60 Call Spread for $.65 (8.6 times usual volume) when stock was trading $34.89

Paper bought 10,233 TRI July 30 Calls for $1.60 (659 times usual volume) when stock was trading $29.78

Paper sold 1380 APO March 20 Calls for $.45 (15.3 times usual volume) when stock was trading $19.50

The company has a solid dividend yield of 4.10% and is currently trading around $22.00 per share. INTC is best known for their processors, or CPUs, which account for roughly 65% of their sales. Some investors may be growing skeptical of INTC, due to the fact that a majority of the company’s profits are obtained through PC sales, which were down 6% in 2012. If INTC wants to maintain the confidence of its shareholders it will have to address additional strategies for growth. PC companies are now shifting their focus from high volume sales to higher margin sales, basically selling higher end, more expensive computers. This is due to sales being stolen by tablets and smartphones, which essentially offer the same capabilities. INTC is planning to establish a partnership with Lenovo Group Ltd. Lenovo is attempting to enter the smartphone market and become the first company to use Intel’s processor chip in its handset devices. Lenovo is the second largest seller of smartphones in China, right behind Samsung Electronics Co. The future growth of INTC is likely to be driven by providing processor chips to companies that sell handset devices such as smartphones or tablets. Expect INTC to meet or exceed analysts’ expectations as it has done so successfully in the past.

Author: Tyler Sciortino

Contact for questions or inquiries at tsciortino312@aol.com

The 14 delta options were chosen because prices between the two options represent a two standard deviation range. A 95% chance AAPL expires between the two strikes. If a 14 delta option was not listed, the closest option to 14 deltas was chosen. These two options have a similar probability of expiring ‘in the money’ (ITM), but they are selling for two different prices. The data is presented in the excel sheet below. The sheet outlines the price of a 14 delta OTM put & call, the quotient of the prices, correlation, and implied volatilities.

Skew could be an indicator for earnings because option prices capture sentiment of traders. Puts that gather a lot of buying interest and therefore higher prices is normally perceived as bearish, right? This is, however, not the case all the time.

The correlation coefficient between the earnings move and skew was .07. This figure is negligible because of its weak nature. A coefficient over plus or minus .80 is considered rather strong. Considering the relationship was near zero, there is not a correlation between AAPL’s earnings move and skew. The results indicate that the efficient-market hypothesis held up in this instance. The efficient-market hypothesis (EMH) is still debated though. One reason is because technical analysis is considered to be weak according to the EMH.

Feel free to e-mail any comments, feedback, suggestions, or general inquiries to… Author salerno.mark.a@gmail.com

Lets take a look at FB’s 2-hour chart to determine where it might end up in the short run. Lately, Facebook has seen a strong move up from the $25 region and this is now catching the eye of investors/traders, leaving them with the question…. should they buy into this move or just sit on the sidelines?

What I want to point out is the large diagonal playing out from the start of November. If you are not familiar with diagonals, diagonals are just corrective moves in the larger trend, and can be extremely hard to trade since they can take quite a while to play out. Diagonals can play out as ‘leading’ or ‘ending’…. ‘leading’ would mean that we are in a consolidation type of pattern that is setting up for much higher levels. ‘Ending’ means that we are in a final push that would lead to much lower levels. So how do you know which one we are in? This can be a hard question to answer, but I believe there is a tell-tell sign of where we are going. The MACD is portraying negative divergence at a time that would not match a leading diagonal, but an ending diagonal. In all cases, ending diagonals are found at the termination points of larger patterns, indicating exhaustion of the larger movement. The MACD is showing that ‘exhaustion’ that we would see at a termination point…

So, where do we go from here, and how low do we go? Well, I am viewing this as wave (iii) of v or the final push in wave v (exhaustion point), which would indicate that we are going to see lower levels from this point on. I am still holding an open mind that we could see a small pullback, which would be wave (iv), and would leave us open to the final push in wave v. If we do get that push I expect us to stop up at $33.15-$34.80. Any breakdown below $28.64 would be the first signal that lower levels are going to be seen, with $25 being the nail in the coffin. Once those levels are broken I am looking for all time lows for FB. Since diagonals are corrective, and this move was up, this means that the larger trend is down since that is the impulsive direction of the social media giant.

Author: Peter Nitso

pnitso@yahoo.com

Twitter: @PeterNitso