Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Apple (AAPL) obviously has had a massive impact on the NASDAQ and shall continue to do so as it is a huge weighting (along with a near 20% weighting in the very popular QQQ ETF). The NASDAQ had been the leading index for 2012 as Apple had a run of some 70% at peak. A remarkable performance for the largest stock in the U.S. market. Of course when Apple is weak the same issue happens but in reverse – we saw that in late spring and early summer when Apple went through a rough patch. But since June it has led the market up. And then it peaked just as QE3 was announced – just as the market did. But Apple has suffered a much larger decline (12.5% and counting)… as has the NASDAQ relative to the DJIA and SP500.
At this point when we utilize our Fibonacci retracements one can see Apple is sniffing at the 50% retrace. With earnings coming next week a move to the 61.8% or 38.2% retrace would seem likely. However which one it is – that’s the question. That said it is rare to see Apple go into an earnings report acting so horrid; usually it is the opposite – run into earnings and sell off after. We’ll see how this one shakes out next week. Note that this 50% retrace also coincides with highs of July – which normally would act as a solid level of support (old resistance = new support)
Disclosure Notice
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund’s holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog
