SPY Another New High Close...Is AAPL Over?

Eight of nine sectors moved higher for the second straight day on Expiration Friday… XLE, XLI and XLU were the strongest sectors.   XLK was the weakest sector. 

Breadth weakened as advancers led decliners…1.88 to 1 on the NYSE and 1.15 to 1 on the NASDAQ…

Breadth strengthens as advancers increase and or decliners decrease.  Breadth weakens as advancers decrease and or decliners increase.

Friday – weakened, advancers led

Thursday – strengthened, advancers led

Wednesday – weakened, decliners led

Tuesday – strengthened, advancers led

Monday – weakened, decliners led

The SPY formed another new high close as trend keeps rising as earning reports continue.  Volume increased to a more typical level on Friday as traders look for a large number of earning releases next week. 

Even though the trend continues to move up traders should continue to watch if prices rollover and be prepared to protect profits.  It continues to appear that the uptrend is more likely to continue, but with a large amount of new information coming into the market through earnings releases, traders must be alert for a potential pullback.

SPY up 33 cents at 148.33...volume 169.9 million shares…

VIX down -1.11 at 12.46…
TNX down -0.32 at 18.43…

TLT up 92 cents at 120.04…
XLF up 2 cents at 17.15…volume 56.9 million shares

AAPL down -2.68 at 500.00…volume 16.9 million shares

FB down 48 cents at`29.66…on volume of 49.6 million shares…EPS Jan 30…bull flag

Look for stocks with good earnings and guidance to likely rise and those with either weak earnings or guidance likely to fall in price.  This selectivity and the typical pause waiting for EPS announcements has so far kept the SPY in a narrow range.  With earnings from GOOG, IBM, AAPL, NFLX and MSFT among many others the SPY could be ready for a move down or up.

Earnings to Watch this Week:

Tuesday – AMD, CA, CREE, CSX, DAL, DD, FCX, GOOG, IBM, ISRG, JNJ, PETS, RF, TXN, TRV, VZ

Wednesday – ATI, ALTR, AMGN, AAPL, BHI, CHKP, COH, FFIV, MCD, NFLX, SNDK, URI, UTX, WDC

Thursday – MMM, ALK, T, BMY, CHRW, CELG, CRUS, CY, INFA, ESI, JNPR, KEY, KLAC, MXIM, MSFT, SCSS, LUV, SWK, SBUX, TPX, UNP, UAL, VRSN,

Friday – HAL, PG, WY

Is AAPL Over?

Through the years many companies have gone through phenomenal growth cycles as they introduced successful new products.  As revenues and earnings soar so does the stock.  In many instances the stock becomes priced for perfection, priced with the highest multiples expecting better than expected EPS each quarter.  When a company misses and disappoints a major sell off occurs and in most instances a stock spends several years in a down and basing cycle.  While ultimately a few may recover, they generally take years to match their priced to perfection high.

While it may be too early to tell if AAPL has reached a multi-year peak, its high price of 701 in September, its subsequent earnings disappointment in October and 28% drop in price puts it in a strong position to be the latest high flyer to stumble.

AAPL price action over the past ten weeks suggests that institutional traders are uncertain about what to expect for the December quarter and that uncertainty is a key reason why price has not recovered and is barely hanging on near support.

Other amazing growth stocks that stumbled in recent years include:  1999 WMT, MSFT, 2000 INTC, ORCL, CSCO, AMAT, 2005 EBAY, 2006 C, BAC, 2007 GOOG, GS, 2008 ICE, POT, RIMM, 2011 NFLX, 2012 CMG.  Is AAPL over for now?

EPS on after the close on Jan 23 will give us the next clue if last quarter was an anomaly or the first step in AAPL being over for now.

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Technical Commentary:

The SPY made another new high close after breaking above resistance on Thursday.   DIA +0.30%, IWM, +0.28%, SPY +0.22% and QQQ -0.22% as AAPL shares moved lower again.  FB formed a spinning top at support in its bull flag pattern.

Trade what you see on the chart of your position.  If it is breaking out of resistance take the trade or stay with the uptrend according to your rules.  If the stock begins to rollover protect your profits.

The Euro was down 53 pips to close at 1.3319 on Friday pulling back from resistance in a strong uptrend.

Disk storage stocks WDC -0.91% EPS Jan 23 and STX +1.03% EPS Jan 28 continue their strong trends. 

Stern Agee stated it expects a cyclic pricing rebound in coal and coal stocks jumped:  JRCC +10.10%, ACI +7.75%, CNX +4.22%, BTU +2.36% and ANR +2.25.  Chinese solar stocks TSL and LDK continued forming bull flag patterns in their multi-week uptrend.

The Market Forecast Green Line is in the upper reversal zone. 

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Setups

Breakout:  EQIX, LEN, FAST, TIF, QCOM, STI, ZION, MGM, NTAP, SINA, NUAN, BRCM,

Diagonal Breakout:  DECK, FFIV, SBAC, JDSU

Bull Flag:  LVS, C, VIAB, X, NTES, ADBE, GES, FB, ATI, YELP, CTXS, GOOG,  CRM, VMW, REGN, TRIP, FSLR, TSL, EXPE, BAC, RCL, NKE, WDC, STRZA

Moves

Breakout:  LIFE, UNG, RIMM, IWM, PHM, SPY, STX, ADSK, TOL, SHLD, JNPR, ANF, CTRP, COH, EXPD, FOSL, WAG, SNDK, F

Bounce: FAST, NFLX, AMZN, ANR, JOY, GILD, CERN, IBM, AKS, EBAY, ADI, GMCR, CTSH, CRUS, COST, FAS, ROST, APOL, PCAR

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58 of 100 NDX stocks closed higher and two were unchanged on Friday…

LMCA spin off Liberty Media resulting in symbols STRZA and LMCAD.  NDX listed symbol is STRZA.

Leading NDX 100 stocks included:  LIFE, FAST, BMC, SHLD, AMAT, XLNX, CELG, SPLS, CERN, CA

Lagging NDX stocks included:  INTC, MNST, AMGN, CHKP, FFIV, FB, CTXS, STRZA, DLTR, ISRG

Leading stocks> +2% on Friday included: RIMM, SSYS, SLB, CREE, SINA, GS, ANR

Lagging stocks < -2.0% included:  LDK, RVBD, UAL, SWKS, TSL, JDSU, GRPN, CROX

Stocks to Watch on Tuesday…

Holding Above 30 DMA = 83
SBUX, CSCO, VMED, SBAC, EXPD, LLTC, PCAR, XLNX, TXN, ADI, SIAL, FISV, ADSK, DELL, FFIV, ORCL, COST, ADBE, NWSA, DISCA, AMAT, CTSH, FOSL, KLAC, VIAB, NUAN, STX, LBTYA, WDC, ALTR, CHKP, FAST, MCHP, SNDK, EQIX, STRZA, CTXS, CHRW, INTC, SIRI, BIDU, VRSK, ADP, AMZN, BRCM, CMCSA, DTV, EBAY, EXPE, LINTA, MU,  SRCL, SYMC, VRTX, WYNN, FB, ALXN, CA, CELG, GILD, HSIC, INTU, LIFE, PCLN, QCOM, MDLZ, CTRX, ROST, SPLS, BMC, AVGO, ATVI, SHLD, YHOO,MAT, MSFT, MYL, NTAP, MXIM, CERN, ESRX, WFM, XRAY

Moving Above 30 DMA = 2

PAYX, VOD                

Moving Below 30 DMA = 1

ISRG                                 

Staying Below 30 DMA

GOOG, PRGO, AKAM, REGN, AMGN, GRMN, NVDA, ORLY, MNST, AAPL, BIIB, DLTR, BBBY, GOLD

Eight Week Intermediate Term Market Trend: Up

Short Term Market Trend: Up