Apple and Markets Breaking Down as Commodities Rollover
Commodities have rolled over today evidenced by the Agriculture Fund DBA which lost its 200-Day moving average on Friday, then fell like a knife today through critical support at 34.80, to end the session down 1.84 (5.13%) to 34.05. Agi wasn’t the only victim, our nemesis Oil fell briefly below 120 to 119.50 after tropical storm Edouard was deemed a non-threat to rigs in the gulf. I believe Oil will be going lower from here as world demand is slowing and most of the volatility we saw in previous sessions has subsided. Virtually all commodities were hit including Natural Gas, Oil Services, Gold, Chemicals, etc.
AAPL and the Techs appeared to be weathering the storm early in today’s session, holding steady while the S&P and Dow initially tanked, then when the indices appeared to be making a come-back, AAPL along with the Four Horsemen and the rest of Tech decided to tank. By the time 3 PM rolled around it became clear that there were no Bulls left willing to put up a fight. This was unusual because in the past, commodities have acted inversely to Tech, but today they were both mauled by the Bears.
Are we going down to retest 1200 on the S&P? It’s hard to say, as the MACDs are all pointing up, providing strong resistance. And if we do fall much further, the trail will start plotting a positive divergence against the MACDs, leading one to believe that we’ll have a strong reversal. First we must see just how strong the Bulls really are. If our lows from last week on the S&P of 1235 can be compromised, then 1200 won’t be too difficult to attain.
So, because of the MACDs and positive divergences forming, I wouldn’t recommend chasing this move down. The S&P has 1235 and AAPL has pretty good support in the 152-153 range. I recommended cash yesterday, I stand by that recommendation still. If we loose these levels we’ll talk some quick and dirty shorts then, if we bounce and the positive divergences kick in, you’ll want that cash at the ready to work for you.
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