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MARKET WRAP UP 10/18/10
After drifting higher in a rather uninspired manner for most of the session, the S&P 500 staged a final hour rally to finish up 0.72% to 1184. Breadth was positive, as financials bounced back impressively from last week’s heavy selling. However, it was not a sea of green, as some areas of technology and consumer discretionary struggled. The day played out in way that market observers have become familiar with recently, as bears who sought to pounce on any sign of a rollover were deeply disappointed by a boring market that seems destined to squeeze higher.
Aside from the action that we saw during regular market hours, there appears to be some real excitement being generated this evening. $AAPL, $IBM and $VMW, among others, are selling off hard after reporting earnings. As you might expect, the serial top callers are out in full force declaring this the end of the rally. Seeing as all three of the aforementioned stocks were extended coming into their respective earnings reports, I am not surprised to see weakness in those names, Popular, high momentum issues often bake in impressive earnings long before the actual numbers are released. Thus, a “buy the rumor, sell the news” investor psychology is common with chic stocks, such as Apple.
Even if the potent selling in $AAPL, $IBM, and $VMW carries over into tomorrow, the bears have an awful lot of work ahead of them if they expect to reverse the uptrend that began in September. At various points throughout this rally, the broad indices have brilliantly absorbed heavy selling in the cloud-computing names, materials, and financials. While this time may be different, and the market could easily sell-off along with Apple, I am reluctant to go against the prevailing trend until I see some more hard evidence in the price action.
Eventually, this market will experience, at a minimum, a sharp 3-5% correction. While many charts appear extended, others are setting up impressively. Cherry-picking the frothy names and ignoring the ones that have formed sound bases is the sign not only of a serial top-caller, but also of a long-term money-loser. If you are wondering where the one-trick pony bears have gone since September, you should probably check the same caverns where the bulls were hiding in 2008.
Instead of choosing a gang and running for cover when the rival crew is in control, a better approach is to avoid that neighborhood altogether and focus on rigorous daily work, while respecting the prevailing trend, price action, and volume.
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Thanks …. I think you need to allow for some more AAPL selling, simply because it is heavily owned, there are lots of profits on the table, and the overall market has run up so much. But, its earnings were really stellar again and product sales numbers ‘disappointments’ seem to be from supply constraints … and helping to keep a floor under the market for the next few weeks are the upcoming elections. AAPL is the perfect buy-the-dip stock, with its high share price/lower commissions, great business and reasonable valuation. I’m going to be patient and continue to day trade it on the long side.
GOOG is a better buy than AAPL in my opinion.
Dont underestimate the Adroid system. This could be the same story of MSFT to AAPL 20 years ago.
I like GOOG too – for short term trading though, it’s easier for me to get a handle on AAPL stock movement and ‘the fundamentals.’ Longer term, could go GOOG’s way ….
AAPL is printing an island reversal pattern as we speak. If it cant pierce 314, look out below in my opinion.
Thanks Chess. I appreciate the work that goes into your research and world-class delivery. This blog is a premium service for free!
Very kind, thank you.
Winning blogs tend to be free. When ibankcoin becomes a paid service, that is when it will go downhill. It is not a matter of quality. It is just that when the FLY decides to extract blood from us plebs, we know that he needs some major coins to compensate for his losing trades.
Look at all the successful bear blogs during 2007-2008. Most of them were free back then. Now, all these losers offer some subscription service because their hosts have been shorting the market since March of 2008.
thats just not true, and they already have a paid side.so how does one not see the success that the site has maintained,and will continue to maintain……….hey cramer is that you……….come on man,fess up…… we know it’s you……..when the fly decides to extract blood from his plebs……..what, is the dude a pimp now? its not a matter of quality. talking out both side of your ass, dontcha think.
Interestingly, both Dan Fitzpatrick on Realmoney and Mike Ashbaugh at Marketwatch have charts of SHLD up today and are confirming what you’ve been saying the last week about a breakout.