December 28, 2015
Mish's Daily
By Mish Schneider
One Bad AAPL Won’t Sink This Market Until…
Only buy the ‘good stuff’ on sale.
(Today’s commentary is by Geoff Bysshe, President, MarketGauge.com)
Christmas is over, but traders are still in the buying mood when prices are reduced.
Weakness in China, crude oil and Apple (AAPL) all helped push the general market lower in the morning providing a good test of the Bull’s post holiday appetite for stocks at lower prices.
The market came back, but not surprisingly, none of the three trouble makers did.
This is not surprising, because discounts alone are not enough to find buyers. This was demonstrated by a pattern we’ve seen for some time now…
Today’s weakest industry groups were those that have the weakest longer-term trends, while the groups that bounced back from the early morning declines where the ones that have stronger trends.
You can see this quickly and visually in our Sector Summary table. The best performing sector ETF, Real Estate (IYR), is one of only 2 ETF in the table with a Bullish Phase. It’s also in the top 3 performers over the last 6 months.
On the downside, the Energy ETF (XLE) was the day’s worst performer which further solidifies its position as the table’s worst performing Sector ETF over the last 6 months and Year-To-Date.
As for Apple (AAPL), it’s in a Bearish Phase, and our Triple Play volume indicator has been warning of dangerous selling pressure for some time now. It was even highlighted in this recent video as a clear example of stock with a dangerous distribution pattern.
However, even with AAPL being a heavy weight the market indexes, it won’t sink the market by itself.
On balance The Modern Family recovered nicely after sliding with the early selling.
But before I cover the ETF’s, take note that especially in this last week of trading, another key ‘indicator’ to watch when AAPL, QQQ, and IWM are looking weak, is how the leading stocks of FB, GOOGL, AMZN, and MSFT are performing.
For example, today when the markets and APPL broke well below their 30-minute opening range lows these stocks did not follow the market lower. And when the market’s decline stabilized, traders scooped them up for great trades, and this acted as an indicator that the market was not all bad.
Today’s recovery was a good test of the Bulls resolve and now provides us with key price points to focus on in the coming days as explained below.
S&P 500 (SPY) Missed filling the gap from last week by pennies. Support should show up at 204.50 and 203.85, but needs to move over today’s high and 205.50 before trusting it to go higher.
Russell 2000 (IWM) 115.20 is the key area to break to begin any move up. 113.50 and today’s low should be support.
Dow (DIA) Only two levels to focus on are over 176 to break higher and under 174 to break lower.
Nasdaq (QQQ) 112.70 could be resistance but the big number to clear is 113. Look for support at 112 and a break under 111.50 is bearish.
XLF (Financials) About to run into 4 major moving averages. Until it clears 24.26 with gusto not much to read. Be careful under 23.79 (today’s low)
KRE (Regional Banks) Held where you’d expect today but needs to clear last week’s high of 42.85 to look any good.
SMH (Semiconductors) It was weak with the market this morning and followed it back up. Needs to clear 54.40.
IYT (Transportation) Trying to for a bottom, but did not recover well today. Until it clears 137.30 it’s still negative.
IBB (Biotechnology) It had a very tight consolidation day. It’s getting ready for a big move. Over 341 will be the first indication that the move will be up.
XRT (Retail) A pretty quiet day. Needs to clear 44.12 to be worth watching.
IYR (Real Estate) May have been helped by lower interest rates today, but it’s coiling for a big move. Watch out if it breaks 75.50 and then 76 is a big level.
ITB (US Home Construction) Just focus on 27.85 and 26.50.
GLD (Gold Trust) Managed to continue its consolidation on top of the 10-DMA
USO (US Oil Fund) Back under the 10-DMA and the low of the gap higher day from last week. 10.66 fills the gap
OIH (Oil Services) Filled the gap. May find support at 26.
XLE (Energy) Very light volume. The 60 level looks like good support.
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