Apple Stock Runs Out of Feul and Breaks Support, Market Action Poor....

Stock-Markets / Stock Markets 2012 May 17, 2012 - 02:29 AM GMT

Apple Inc. (AAPL) is a leading stock as we all know too well by now. The single most loved stock on planet earth. No other stock is as closely watched. No other stock gets as much love. No other stock gets bought as quickly as Apple does. That is, until it no longer does. Everything becomes full over time. When all anyone wants to do is talk about a given stock, it's time to look elsewhere. The good news is all in and it's flush-down time. There's only so much a single stock can give, before it runs out of fuel. Every stock over time runs out of fuel. There are no exceptions, bigger picture, over the years. Apple is now down just a little over one hundred dollars from its all-time highs. It's not going to be seeing those old high readings again anytime soon.

Apple had been playing with massive support at $555 for a few days, but finally gave it up a bit more forcefully today, even though it closed just below that last night. It's still not too far below, and with the 60-minute chart grossly oversold, it could see a bit higher short-term, but capturing 555 back, with force, will not be an easy chore for the Apple bulls. It is an extremely heavily weighted stock in the NDX, and when Apple is sick, the Nasdaq is sick, and when the Nasdaq is sick, the stock market is not likely to be feeling too well either. Apple snapped, and although the market was oversold at basically 30 RSI on the daily index charts, they simply could not bid up today, even though they were up very strongly early in the day. The bids just could not hold as Apple dragged it all down at the end of the day. All the major indexes were a drop red, although the Nasdaq 100 was down decently, or nineteen points. The market is sick, but more on that later.

The Fed minutes came out today and this is where things got incredibly interesting. The Fed Governors are more in accord now that a QE3 program should be implemented. It's a bad move, in my opinion, but it's going to happen sooner than later. The market is begging for more free inappropriate money. Here's what's so interesting. All the S&P 500 did was move up five quick points on that news, and then fell right back down. More and more, Fed Governors are coming on board to do it, yet, the market didn't burst higher as many would have thought likely. Even more interesting, gold and silver did nothing on the upside at all.

As I've said, those trades are dead, and both are in bear markets. Sure, once QE3 is officially announced, we will see some knee jerk move higher in those commodities, but the best days of gold and silver are long behind us. They are, currently, both grossly oversold with RSI's between 18 and 22 on the daily charts. It shows how unloved they are now. They will bounce, one would think, and the bounces can be decent, but these commodities are done for right now. Even the likely announcement of QE3 did little for both stocks, and those bear-market commodity stocks. Things are shifting, to be sure. Bulls aren't going to like these shifts, if they continue, which seem likely to me in the world of commodities.

Leaders are breaking down all over, and this is the most disturbing aspect of what's taking place throughout the stock market world. Other than the railroads, it's hard to not find an area where something important isn't breaking down technically. Leading technology stocks everywhere are getting ripped apart as well as leading financial stocks and leading commodity stock. You can look everywhere else as well, and the story is then same. Not to the same degree as those three areas, but there's carnage everywhere you look. The problem is how these stocks are getting hit and how they're losing support.

Look at stocks like KLA-Tencor Corporation (KLAC), J. C. Penney Company, Inc. (JCP) or Abercrombie & Fitch Co. (ANF) today, a semiconductor stock and two retail stocks. Huge volume on the large gap downs below support, which puts any rally back up on the small side of the ledger. There won't be any strong moves upward on these stocks in the near- to middle-term. When you see large volume distribution on leading stocks, it's a major red flag for the stock market. This type of volume was everywhere today, throughout the stock market world. Something you must not ignore, because, like I just said, it means any oversold rally back up will be on light volume and likely to be rather small in nature. That's bad news for the market.

So what's Mr. Benanke to do about all of this is what the stock market world is wondering. He'll do QE3, and give the market a temporary boost. He's probably trying to time it with some European event, or maybe, if necessary, an event here in the United States. He only wants to implement it when he thinks the markets are in great distress. The market is on the precipice of something that would make the bears happy. We're oversold and we should rally soon, but the nature of the next rally is critical to understanding what's on tap for this market. It doesn't look great, unless we get some real good news from both here at home and overseas. 1314 is the line in the sand for the market bulls.

Peace,

Jack

Jack Steiman is author of SwingTradeOnline.com ( www.swingtradeonline.com ). Former columnist for TheStreet.com, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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