The selling pressure was not contained today to Financial stocks – the NASDAQ lost 4.94% today, the greatest decliner of the four major US Equity Indexes, followed closely by the Russell 2000 (off 4.82%). Many technology and small-cap stocks fell greater than 5.00% today. Let’s take a quick snapshot of Apple Inc (AAPL) and view its daily and weekly graphs.
Apple Inc (AAPL) Daily:
What surprised me and many other traders I’m sure is that Apple set-up a relatively strong buy signal – a potential bullish flag – at the $170 level after a new momentum high followed by a clean and orderly retracement to the confluence of support via the 20 and 50 day EMA (complete with doji candles).
Ultimately, the trend failed to shift back to the upside and the support was taken out which set-up a test of the 200 day SMA which also formed a doji and potential entry pattern – it also failed.
Since then, investors have punished the stock from $180 to less than $130 in the span of a month – a sharp decline. We now have a new momentum low registering on the chart and we have to pull back to the weekly chart to find potential support.
Apple Inc (AAPL) Weekly:
The weekly structure (overlaid with Fibonacci retracements) shows potential support comoing in at the 2008 price lows and 61.8% Fibonacci retracement at roughly $120.00 per share.
Should price break $120 solidly on a weekly closing basis, this would set up a potentially quick test of the rising 200 week moving average and also ’round-number’ support at $100.00 per share, which would likely cause bulls to step up and acquire sizeable positions at those prices.
Also, breaking beneath $120 per share would officially classify Apple as being in a confirmed downtrend on the weekly chart (having formed a lower low, lower high, and then swinging down to take out the swing low at $120).
I mentioned that other Technology stocks suffered today, though Apple was hit particularly hard. Let’s view a snap-shot of performance today on the broad sector.
Technology Sector as a Whole (S&P 500 HeatMap courtesy FinViz.com):
There were only three green spots in today’s trading in technology:
Nvidia (NVDA) actually rose 4.28% which – if you view its daily chart – appears to be in a retracement back to the $11.00 level to the 20 day EMA – it’s in a confirmed downtrend and is experiencing a counter-trend retracement.
SanDisk (SNDK) actually offered a significant ray of light, jumping (gapping) up almost 40% today. A massive bullish divergence preceded today’s action, and it’s one you might want to look at for a potential long-term position trade.
Finally, Dell (DELL) rose just over 1% today but I wouldn’t get overly excited, given the massive decline Dell has experienced this month – it’s been a culprit in dragging down the entire NASDAQ index until present.
Everything else was deep red.
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Continue to use caution in this difficult and challenging market environment.