This Market Hinges on APPL

On Tuesday I mentioned how no matter what the election outcome stocks are in a downtrend and that will not change regardless of who wins the election. Yesterdays monster decline sent the VIX soaring to the top of its Bollinger Bands on the daily and the TRIN closed above 2.

Here’s a key point about the market – no market goes up or down in a straight line. Those two key market internals are indicating the market is due for a breather at the least and maybe even a short covering rally.

The overall market will not rally without APPL. A weekly one standard deviation move in APPL is at 550. APPL is slightly below that now. This is a crucial time for APPL – the market is waiting to see what APPL can do.

As a trader I’m placing my bet on that APPL can turn around and lead the market into the close. Here are the key levels I’m looking for:

1) Can the low at 541 from this morning hold?

2) Can APPL break above the trend line on the 5 minute chart below?

3) I’m using Carolyn Boroden’s Fibonacci support and resistance zones that are between 549-553 as key levels to close above.

Two ways to play this. If you like trading on the edge go ahead and sell a put credit spread in APPL now. As I’m writing this you can sell the 540s that expire tomorrow and buy the 535s for $2.

If you’d like to wait for confirmation then wait until all 3 steps above have been confirmed into the close. If they have then sell a one strike out of the money put spread that expires tomorrow and look for gap up in the morning.