Wednesday Update

My system flatlined yesterday and moved lower to +1350 today. My system is still basically flatlined and so is the market which is pinned right under 1475. Perhaps it has to do with options expiration on Friday. I'm still expecting one more break higher to the 1490-1510 area. I've been negative on Apple for some time and argued that a break of $565 sealed a major top in the stock. However, yesterday when the stock was at $486 I decided to go long with some long-term calls. I'm expecting a move to the $600-625 area in the next 2-6 months where I will sell. If we go to $440 right now, the position was a bad one and it will stop out. This is roughly a 3:1 reward to risk trade. What's interesting is that if the market enters the worst case scenario in the first half of 2013 and drops 20-30%, Apple would have to go up against this backdrop which doesn't seem likely. But it didn't seem likely that Apple would drop 30% at the same time the market was flat and that is exactly what happened. My guess is that Apple starts to rise in anticipation of earnings next Wednesday and then will gap higher due to spectacular earnings. Apple bulls should enjoy it while it lasts, I am doubtful it sees $700 anytime soon.