Will Apple Get Lift From IBM Profit?
Disclosure: Long
It’s an odd question to ask, but the Tech Sector is desperately seeking a leader. And Apple, who once held that station, has so far been unable to deliver. Has IBM assumed that leadership position with their impressive 3rd quarter profits that not only beat the street, but reaffirmed their 2008 guidance? The Crackberry maker, Research in Motion (RIMM), certainly failed the calling, and Google (GGOG) is a mess. Apple (AAPL) has yet to show us the way.
Apple and the markets, particularly the Nasdaq, had the perfect opportunity today (Wednesday October 8th) to establish a bottom and rise from those ashes. We had all the classic indicators, the session starts with a gap down followed by an impressive rally on excellent volume late into the session. All we needed to do was finish strong. Then with barely a half hour left to the session AAPL and the markets dumped big time.
From a technical perspective we have all the right ingredients for a pop here. There are massive positive divergences on the 60 minute and daily charts, both with the RSI and the MACD, and extreme oversold conditions with the RSI skating along the 30 level. The Volatility Index (VIX) is at an all time high with negative divergences weighing down upon it. Under any normal circumstances, with multiple confirming indicators, markets would take that queue and run away with the prize. But apparently these are not normal circumstances. This Bear has got a firm grasp and is not willing to let go.
So now we have a new leader of Tech in IBM. During the session today IBM shed over 5% from its market cap, but then in a surprise move, IBM decided to stop the bleeding, after dropping a whopping 12% in just the last week, and announced preliminary profits this evening around 6 p.m., which clearly shows the tech service giant is in the game and here to stay.
So, the big question now, will Apple be able to get a lift from IBM’s story? Will Apple be able to reassert itself as the leader of Tech? Are investors fears about a tech sector breakdown set to rest? I certainly hope so. And I know of about 3 or 4 million other investors that hope so as well.
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