"CEO Steve Jobs was featured on the cover of the Feb. 21 edition of Fortune. Magazine covers can serve as a contrarian sell signal."

i've heard this before. AAPL may be a good short here soon.

btw: larry, are you still short QQQQ at 38? what's your gameplan on that? weekly sar or COT or what?

thanx.

-ja

great idea!

Joe,

That’s true. Historically, magazine covers have made a great contrarian indicator. And it’s not only true with stocks. I haven’t checked it in a long time, but I can remember that whenever a team was featured on the cover of Sports Illustrated, the team would lose the following week a remarkable percentage of the time.

Yes, I’m still short QQQQ. I was using the 50-day moving average as my stop. But I’ve switched to the daily SAR for this position. Yesterday, the SAR was at 38.07. It will be a little lower than that this morning. So my risk is pretty much out of it. I’ll also cover if the Q’s give a BB or a VTO buy signal.

The job number came in at 260K or so vs. a consensus of about 220K. It’s the goldilocks number -- not too hot or too cold -- that I think the Street most wanted to see. So stocks are responding favorably.

Larry

here we are one month from my original post & AAPL is basically flat.

it did, however, close below it's 50 DMA & volume seems to be drying up. the weekly SAR dots went bearish about a month ago too. i still think this one is a good short canidate. if the 9 day RSI closes above 70 i think that would be a good entry - maybe early in the cycle - but probably a fairly low risk entry.

thot's?

-ja

According to O'Neil, the ideal entry for AAPL will probably come sometime this summer, several months after it made its high. That assumes that it doesn't make a new high. Also, the 50-day will probably have either crossed or about to cross the 200-day. It's really an education to study all the charts he has in that book. The similarities of the best shorts are striking.

Larry

Hi Larry,

Could you summarize the similarities of the best shorts?

Thanks,
Steve

Steve,

http://ldholmes.com/password/smrdaily4-6-05shorting.htm

You just have to study the charts in the book to understand what I mean. It's just not that mechanical. But if you study them the similarities will start to be obvious.

Larry

Have you guys ever heard of the Madden box cover curse? Each year, the John Madden football game features a star player from the prior NFL season. I was told that for 3 years in a row, the players featured on the cover ended up with a bad injury at the very start of the next season. Cursed players includes Atlanta QB Michael Vick, and Randy Moss. This "cover effect" seems to apply to lots of different things in life...

Russ,

I haven’t heard of the Madden box cover curse. But I am familiar with a bunch of other similar ones. For example -- I don’t know if it’s still true or not -- but for years whatever football team was featured on the cover of Sports Illustrated had a knack of losing the following week.

There’s been some covers that were contrary indicators on the stock market as well. The most famous was the Newsweek cover in 1979 that declared “The Death of Equities.” Of course, we tend to forget that the stock market didn’t actually find a bottom until 1982, three years after the cover story.

As long as there’s some logic behind it, it’s probably a valid contrary indicator. I’m not sure if I can see the logic behind a player being featured on Madden’s game and an injury. But maybe there is.

Larry

anyone see aapl chart today? the magazine curse LIVES!!

-ja

Hey Joe


I was going to post the exact same thing! Great call.


Regards
Andy

You’ll know to short Apple when I finally break down and buy an Ipod. Then you’ll know that everybody in the world already owns one.

It is kind of interesting that the only true growth company left in the Nasdaq 100 may finally be rolling over. And there was a time when I would want to short it here for a move down to its 200-day moving average with a stop above the 50-day moving average. But after really digging into the charts in O’Neil’s book, I think the risk/reward dictates that it is too early for that. The time to short AAPL will be late this summer or fall, assuming it has seen its high. By then the 50-day will be moving below the 200-day, AAPL will probably have made several attempts to move above its 50-day average, and it will be ready for the big move down. Of course, this all assumes that it has seen its high.

By the way, this is kind of off the subject, but CNBC has a new show that's really entertaining and sometimes informative. They've given Jim Cramer an hour show in the afternoon. It's called "Mad Money" or something like that. Some people can't stand Cramer, but I like him. He reminds me of so many guys I used to know in my Wall Street days -- quirky, hyper, and smart as all get out. A real character. I thought about him because I know he likes AAPL.

Larry

I've watched Mad Money a couple of times, it is pretty entertaining.
Different train of thought: It looks like everything is having trouble getting any traction as long as the dollar keeps rising. Greenspan better start printing more money.

Gary