To say Apple has fallen from grace would be an understatement of epic proportions. To fall from $705 to $388 in a matter of a few months is not a correction. That is a blowout. Just take a look at the magnitude of the fall.

In the neoclassical view of the world, there are certain technical setups that have high probabilities associated with them. I originally documented this phenomenon in my latest book, Trend Trading Setups and then did a short article in Stocks and Commodities magazine sometimes afterwards on one of the particular set-ups that we see lead to significant price destruction or appreciation. That particular set-up was witnessed last week in gold and followed by silver on Friday. It is setting up now in the major European indexes.

Technical Analysis is centered on the notion that a chart represents a complete reflection of all fundamental and technical data relating to a stock, a sector, or an index. For the better part of half a century, technical analysis was mostly about patterns like triangles, channels, heads and shoulders, etc. With the advent of computers and a proliferation of charting software, pattern recognition continues and is heavily augmented with derivative indicators such as stochastic oscillators, moving average convergence divergence (MACD) and numerous others. In fact the proliferation of indicators borders on incomprehension anymore with new ones popping up seemingly weekly anymore. I term this genre of patterns and indicators as classical TA.

It doesn’t matter where you look because there are divergences pretty much everywhere in the equity markets these days. There are divergences between the domestic U.S. equity markets and most overseas markets. Overseas markets are mostly lower for the past month or so while the S&P 500 is near all-time highs.