AAPL (Apple Inc) has now fallen to horizontal support where a reaction (i.e.- bounce and/or consolidation) is certainly possible although I have no interest in trying to play a bounce in the stock. In fact, I am short the QQQ’s (in which AAPL is by far the largest component) and with both the intermediate & short-term trends currently bearish, my preference at this time is to sell the rips, not buy the dips.
Only time will tell whether or not the current bull market is just taking a breather or has already exhaled its final breath. With the recent 50/20-day ema death crosses as well as both long-term & short-term trendline breaks (in addition to other recent bearish technical developments), it would appear that, at the very least, the markets are at a critical technical juncture at this time. (Note from Tim: this post is outstanding and timely; click on any of the thumbnails for a much bigger graph):
If and when all key US equity indices are clearly trading below their respective primary bull market uptrend lines shown on these weekly charts, the next major sell signal will come on a bearish crossover of the 43/17-week ema pair (on not one, but all major US stock indices).
The 43/17-week ema pair can be found in the upper-right quadrant of the first two charts below. The 50/20-day ema pair has done a fair job of defining the intermediate-term trend historically and can be found in the lower-left quadrant of the first two charts. The histograms at the bottom of each chart provide a visual representation of whether the faster ema in the pair is trading above or below the slower ema, and by how much.
The horizontal lines on this SPY chart mark all FOMC meeting announcement days in since the beginning of 2014. Other than one exception following the December 17th, 2014 FOMC announcement*, the stock market traded lower within a few days to a couple of weeks.
*The rally that followed the December 17th FOMC announcement came on the heels of a 7 session, 5%+ correction in the SPY. Additionally, following the oversold/FOMC induced rally which peaked 7 days later, the SPY fell back sharply to the Dec 17th announcement level within just 5 sessions, quickly erasing that entire post-Fed rally.
Bottom line: While the primary trend in the market has been bullish in recent years, in nearly all instances, any post-FOMC announcement rallies were faded within hours or days. Taken in light with the current bearish technical posture of the equity markets, I would put good odds that the market will be trading lower within the next week or so.
Something that I like to watch for as we head into the thick of earnings season is the market’s reaction to quarterly earnings reports. Although one day does not make a trend, I went ahead & put together some stats on the market’s reaction to the most recent batch of earnings reports. I chose yesterday because the US equity markets were essentially flat, with the $SPX virtually flat at a close of -0.15%, the $NDX closing up +0.42%, S&P Mid-Cap index a flat +0.01%, S&P Small-Cap index -0.24% & the Dow Jones Total Stock Market Index closing at -0.11%. That’s about as flat an overall market close as you get. Therefore, all other things being equal, the reaction to individual companies that reported after the bell on Monday or before the open yesterday shouldn’t have been influenced by money flows in or out of the broad market tracking instruments (e.g. – S&P 500 index funds, QQQ, IWM, etc…), as is most often the case.
While our beloved Slope-meister rounds out his European vacation, I figured this might be a good time for those of us stuck at home to take our own quick trip around the world. I’d have to say that I have not seen such a unanimously bearish technical outlook for just about every major global stock market that I follow, US markets most certainly included, since at least early-mid 2011, if not late 2007. As (price) action speaks louder than words, without further ado I present you with a compilation of daily & weekly charts of the world’s largest equity markets. (more…)