In the coming weeks, Apple stock may become a victim of hunt and destroy algorithms.  We take precautions to make sure that our subscribers do not become victims of such algorithms.  Further, as part of our tactics, we help our subscribers profit from buying into artificially depressed prices that occur from such algorithms.

In the world of investments, twin practices have coexisted for ages.  First, a large number of investors enter stop loss orders to protect themselves.  Second, such stop loss orders become sitting ducks for some professionals.

In the past, market makers and brokers may have run the stops, but more recently, hunt and destroy algorithms have evolved to run down the stops.  Such algorithms simply try to guess where the stops are grouped and if stops start hitting, the algorithms take advantage first by short selling and then buying to cover.  Of course the foregoing is a simplified version, in practice there are a lot more complexities.

Further, with the exception of brokers regarding their own clients and accounts, there is no legal way to know where sell stop orders congregate.  From my 30 years of experience in the markets, I’ve found that stops tend to congregate at five places:

  • Just below the last swing low.  In the case of Apple it would be below $505.
  • Round numbers.  In the case of Apple it would be below $500.
  • Just below trend lines.
  • Just below crossover of certain moving averages.  Apple stock is there now.
  • Just below where sell signals would be generated by popular technical indicators…Read more at Forbes
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