AAPL Reverses Gains as Stocks Close Just Off Their Lows
Sellers took to the market as the NASDAQ suffers a major day of distribution. The carnage continued after hours with FFIV reporting mixed results sending the stock lower by more than 30 points in after-hours trading. The open belonged to AAPL as the stock hit all-time highs prior to the market open, but sellers were able to reverse its fortunes to bruise the response to AAPL’s blow out earnings report. The Dow Jones Industrial Average was able to hold up, but IBM helped its cause. Small caps were the biggest losers as the Russell 2000 droped 2.6% on the day. Clearly stocks were sold today; one day doesn’t make a trend, but can leave a sizeable black eye.
Marker leadership certainly took a big hit today as many were hit badly. A few market leaders like CMG and LVS have failed to make a big push after punching back through their 50 day moving average. Typically, you we would see these stocks continue to run after punching through. It would be prudent to take profits off the table and cutting laggards. This market run from March 2009 is very long in the tooth and a larger correction is not out of the realm of possibilities if you take a look at history.
Over the past few months, even back to this June we have seen comparisons to the late 30s and the 70s with this market. History will never repeat itself precisely, but it will often have a similar tone and action. With today’s distribution day on the NASDAQ and given past history a sizeable correction is not out of the question here. However, all of this is pure speculation and we’ll let the price and volume action guide us through this market.
The market will need to be able to rebound quickly and gain some major traction if it wants to continue higher here. However, the overwhelming bullish nature of market participants and the lack of breadth confirming the new highs a correction seems highly probable. Make sure you cut your losses short here and trade with caution.
