Looking at the NASDAQ 100 index and its ETF, shown below, it's not much of a surprise that Apple is bouncing big. After the breakout above resistance (which I've circled in green), both AAPL and QQQ zoomed higher, paused, and then retraced their way all the way back down to the aforementioned line (which now serves as support). Yesterday and today, the market refused to go lower than that line, so when in all likelihood is gaps much higher above it, that line's importance as support will simply be affirmed.
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Data released on Tuesday shows that Home Prices rose, but New Home Sales fell, as shown on the graphs below.
This data goes hand-in-hand with a decline in Existing Home Sales and in the NAHB Housing Market Index, as mentioned in my post of April 19th.
Additionally, Consumer Confidence fell, as shown on the graph below. Since it's a "leading indicator of consumer spending, which accounts for a majority of overall economic activity," it's worth tracking to see if this is a harbinger of economic contraction, or even recession.
As most of you know, I don't trade Apple, but – – as the entire galaxy awaits their earnings results after the close – – it's amusing to note how crowded calls for Trillion Dollar Cupertino became at the exact peak of the stock's price.
I can only imagine the faces of the retail bag-holders if the stock continues to slip tonight.
A pleasant song for the next twenty-four hours of trading chaos….and a beautiful movie clip, too!
I have to be away all day on Tuesday so this is just a quick post to cover the action on SPX today. On the 15min chart the bounce was just above the low two weeks ago and is forming a bear flag. There was no negative RSI divergence at the low so I'm not expecting a strong bounce. There should be strong resistance in the 1374 area which 'd expect to hold and declining resistance from the high, currently in the 1382 area, should be very solid resistance tomorrow. I'm not expecting declining resistance to be touched tomorrow but if it is, and then breaks, then that would be a strong signal that the retracement may have ended earlier than I expected:
The other chart I'll post tonight is the 60min SPX chart showing the possible sloping H&S that may have formed there, and the bounce today was at the neckline of that pattern. I'm inclined to take horizontal neckline H&S patterns more seriously than sloping ones, but it's something to bear in mind:
Something to consider looking at these H&S patterns, with the best ones I'm looking at on Dow and SPXEW, is that a neckline is also a strong support level. On a break below the neckline, and neither Dow or SPXEW tested that neckline today, the target is a high probability one, and that would suggest a much deeper retracement than everyone expects. The flipside of that however is that the necklines may hold, in which case SPX may make a fairly marginal new low or test 1340 and finish the retracement there. Worth bearing in mind.
I'm out all day, but will be back doing my morning post as normal on Wednesday morning.