Apple Investors, Indexes are Oversold is an Understatement
Every index is oversold, and not just in the technical sense, but in the historic sense. The Dow is in the worst shape with stochastics under 6 and its RSI well under 30, finishing up at a bit over 24. You would have to go back to October of 2002 to see similar levels. The S&P is very low as well, and the Naz, while not quite as bad, is still extremely oversold.
So the big question is how long can the markets remain this way? The answer is, they could pop at any time. Then again, these conditions could drag on for days. One thing is for sure, the oscillators will need to be reset through impulsive buying. Investors will be looking for any inkling of good news to get them going. But the reality is there hasn’t been any good news to speak of, for example, US automakers reported steep declines today (Tuesday July 1), and Oil inched up today as it’s still vying for $150 per barrel.
Well, tomorrow morning (Wednesday July 2) there will be a slew of important economic reports before the market opens including; Jobs data (Challenger Job Cuts Report, and ADP Employment Report) and Factory Orders, which include the state of inventories and manufacturers stability for both durable and non-durable goods. Then after the market opens we have the EIA Petroleum Inventories report at 10:30 AM. If petroleum inventories have fallen off below acceptable levels, Oil will spike. The pre-market is going to set the tone for the rest of the day.
On a brighter note, AAPL had a spectacular session, extremely bullish. It opened well south of the previous close, then blasted off rising throughout the day, advancing nearly 10 points from the previous close. It closed the day on the high of the day and plotted a Bullish Engulfing Candle. This was in stark contrast to the indices, which struggled for the majority of the session only to rally late in the day. The Bulls did everything in their power to prop up the S&P to ensure that 1275 was not compromised, because they new if it was, the next step down would be deep. The 1275 level remains critical support, if the economic data is really bad, it may well be compromised. It will be important that this level is maintained on a closing basis.
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