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Just as soon as the S&P 500 bounced back above the key breakout point from early-March, it is sinking back below there this morning. As I noted on my video recap last evening, I suspect plenty of stops are being triggered for both longs and shorts. Looking at the Russell 2000 Index, we could easily be printing a textbook bear flag on the daily chart. However, we are still in an overall uptrend and there have been tons of false breakdowns since the March 2009 bottom. Thus, I continue to favor cash until the picture clears up a bit.
In addition, I see that AAPL is finally starting to come in a bit. The overly-crowded trades that initially work very well during a market correction have a knack for unraveling just when they seem like the ultimate safe havens. I would not be surprised to see some reversion to mean next week there, with a dose of humility to complacent longs. I also see that Google continues to struggle with a major weekly breakout, after a negative reaction to last evening’s news. However, none of the above is a reason to become mega-bearish on the market. Instead, it is a good idea to take a momentary step back and avoid having your capital, and confidence, chopped to pieces.
But just imagine the gains that are being realized on the sale of AAPL stock.
The glass is half full.
Agree. Not a long-term commentary on the stock at all. More of an expectation that latecomer long traders would be punished.
hilarious rejection there