The markets climbed the wall with vigor on Friday, but today it had to catch its breath. The good news is that we stayed above the breakouts we pierced so fiercely in the previous session, the unsettling news if that we didn’t push away from them, the Dow remaining just above the critical 12,750 mark. On a breakout, ideally you want to keep the run going. So, it’s cause for some contemplation. Also, we haven’t reset the oscillators, remaining in an overbought condition. It would be better if they unwound a bit providing some running room for more buyers.
So, what this means is we are at some sort of cross roads. Not a good environment for considering longs, as there are no solid technicals to justify a position. This action is evident from a candlestick analysis, the Dow put in a red hammer with the tail bouncing off of 12,750 and ending a bit down from yesterday’s close -24.34 (0.19%). This shows the Bears took control early on, eventually the Bulls took control and successfully defended their territory. The Naz and S&P showed more strength than the Dow. But they also had to fight off the Bears early in the session, with both ending in slightly positive.
AAPL on the other hand was in a different place today, up +7.12 (4.42%), shedding -0.81 (0.48%) in after hours trading. Unlike the markets, AAPL kept the run going and didn’t look back. There’s obviously a lot of optimism building prior to earnings. But you have to respect the action in the broader markets. So, my gut tells me the best course is to still play AAPL with care, and don’t stay too exposed after hours. I still recommend paring down shares of AAPL prior to earnings, and lock in profits when you can. But man, look at the incredible rise in price and volume near the end of the session, that’s a lot of optimism!
-zach bass
