With Apple cratering hundreds of points in recent months, and every quick bottom-picking attempt run over for a quick stop-loss trigger (in my case), logic would have dictated that the heavily-weighted marquee stock should have pulled down the rest of the Nasdaq with it. By now, of course, we know that has not yet happened. Instead, we have seen the consummate stalemate.
And I think the monthly chart of the Q’s, or Nasdaq-100 ETF, best illustrates this point. We have three consecutive standard “doji” candles in a row, which simply indicate mild indecision. Note how the price swings here have tapered off relative to prior months. Things are grinding to a halt, overall. And when the next move comes, it is sure to be a big one.
Trying to game that move is particularly interesting here. The logic that we should wait for Apple to bottom before turning bullish on the Nasdaq would have seen you missing the full rally since last New Year’s Eve. The alternative idea that Apple will soon become dead money, even if it does stop going down soon, would render the Apple “tell” essentially null and void.
As you can see, the gamesmanship involved with keying off Apple has become nebulous. The larger point is that the Nasdaq has been compressed for many months now, and we know from periods of compression often come explosions.
Stay on the ball.
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