Apple Investors Got Bounce but Time to Resume Downtrend
Well we got the bounce I spoke of yesterday. It wasn’t the greatest bounce, and may not have unwound those oscillators as much as one would like. So it’s possible there may be some more kick left in the markets and AAPL before we continue the sled ride down. But the mortgage crisis is weighing real heavy on every sector, so it may not matter.
Yesterday (August 20) I said that it looked like the market needs to shed itself of this mortgage crisis before it can get on the right track. I’m becoming more and more convinced that one of the biggies must go down before the market is satisfied. Will it be Lehman Brothers (LEH), or perhaps one of the finance giants Freddie or Fannie? I don’t know. But massive write downs and losses are going to continue to drag the market down until one of them falls.
So, as I said the bounce wasn’t so great, so under normal circumstances I might expect a a residual bounce. But this finance deal is just too big of a problem and it’s consuming big time investors’ mind share. So I expect that we’ll continue the downtrend. The good news, if you want to call it that, is that we may trade sideways for a while before making the big plunge. We have a fair amount of support on both the S&P at 1260 and the Nasdaq at the 50 and 20 day moving averages, which may cause a pause in the ride down, likely putting in some sort of continuation pattern, like a flag or pennant over the coming days. But after that, I expect more pain.
So the big question is do we retest the July lows? I think we may come close, and as we do, it will likely strengthen the positive divergences on the weekly charts that I’ve mentioned several times here. And that may provide us with another rally sometime in the near future. But it’s way too early to be forecasting rallies, we’ve got a lot to deal with in this current downtrend off the previous rally, and the finance woes to compound everything.
Apple has been getting a lot of press lately, virtually all positive. More and more analysts are upping their targets, many of those targets are well north of 200. The iPhone looks to be blowing away sales forecasts. Although there have been some glitches in quality along the way, which I have been very vocal about. We have 22 more countries selling the iPhone, and 50 more waiting to be set up. And then there’s the Best Buy deal to sell iPhones as well. We have the School and Holiday season, which is usually preceded by product introductions. This is all good stuff, and I’m sure it will do wonders for Apple’s bottom line. But will investors care in the short term while the rest of the market is being dragged down? I think not.
Apple’s fundamentals will win the day in the end, but right now trading AAPL is not about fundamentals, it’s about market sentiment. The rest of tech and small caps are really trying to put on a good showing, and the Naz has clearly been more resilient to this downward pressure than the S&P and Dow. But the market is hurting right now, there’s a cancer that must be extracted before any one sector can move forward. So I expect AAPL to test it’s 50-day moving average at 170 and change, and possibly its 20 then 200. AAPL will move downward fractionally compared to the indices, and may even show some life with upcoming new product announcements and more upgrades. But the weight of the world is simply too much to expect AAPL to make any significant advances in the near-term. Enough said.
If you’re looking to become a better trader, and how to best navigate turbulent markets, and most importantly, how to keep the money you have, then you should check out the Wilderness Investors Group. Click here to learn more and request membership. We have a vibrant community of professional and individual traders where you will learn how to exploit the markets and master the secrets of the trade.
Add New Comment
Viewing 5 Comments
Thanks. Your comment is awaiting approval by a moderator.
Do you already have an account? Log in and claim this comment.
Do you already have an account? Log in and claim this comment.
Do you already have an account? Log in and claim this comment.
Do you already have an account? Log in and claim this comment.
Do you already have an account? Log in and claim this comment.
Do you already have an account? Log in and claim this comment.
Add New Comment
Trackbacks