For a market that is near flat there has been a tremendous range of movement today – I counted about a 2.5% intraday move about an hour ago (and it's probably closer to 3% now) in terms of total trail traveled. Nearly 1% up on the gap open, over 1% lost between that open and noon, and then smaller whipsaws since. The market is undecided today on direction and everyone seems sidelined as we await the Apple earnings news after the bell. It is like Bernanke is about to make his announcement but in northern CA rather than D.C. Frankly I find it a bit silly that people will be buying or selling stocks en masse based on this one stock but that is the structure of the market. Apple has nothing to do with a Priceline… or a Chipotle… or a lululemon… or for that matter Caterpillar or 3M but they will all be judged by Apple when we come to the market tomorrow.
The market is in a very difficult place right now – oversold but not at a point it cannot get stretched down again on an Apple "disappointment". The NASDAQ has bounced of its 200 day moving average 3 days in a row now, and in parallel the S&P 500 has been rejected by its old April 2012 highs 3 days in a row. So stocks have been stuck in between these two spots since Tuesday. There is a great probability that in just over an hour we will know which way out of this range we are going to break out all because of one company that sells electronic gadgets. Hundreds of billions of value will be created or lost across all asset classes based on if you bought that extra iPhone or iPad.
Anyhow key levels are that 1422-1425 on the S&P 500: 1425 being the level the index broke down from and 1422 being April 2012 highs. That's been resistance this week. On the NASDAQ the 200 day moving average is ~2975; that's been the support since the S&P 500 is in no man's land to the downside. The intermediate term situation in the market is damaged quite substantially and individual stocks are breaking down all over the place, but everyone knows a rip your face off oversold rally of a few days will come at some point and bears don't want to be anywhere near that. So the question is does that surge come after more pain or does Apple provide the catalyst?
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