What if AAPL doesn’t bounce?
What if AAPL does bounce but then fails way short of its most recent highs in the $700 area?
What if the market has topped, like it did in October of 2007?
Nothing can be ruled out.
Q’s have now closed below the rising trend line off the June lows for two consecutive days. I don’t expect the Q’s to go straight down, but I would expect any bounce to be sold into for now. The RSI 14 for the Q’s is at 35 so should the Q’s continue downward next week then the RSI will drop below 30 and that could/should signal that a bottom formation of some type is at hand. But, you know, it really is about AAPL and the Q’s can’t bottom until AAPL bottoms. AAPL reports earnings on Thursday, October 25th and anything can happen between now and then. The next Fib projection on the Q’s is down at 66.08 and we’re really not that far from there.
$NYSI dropped by 37pts on Friday and has been dropping by about 30-40pts per day over the past four sessions. This is evidence that market strength has evaporated and has been replaced by market weakness. When we finally do hit a climax bottom, $NYSI will drop by 70-90pts and that may come anytime in the next week to 10 sessions.
Daily chart of $SPX showing how it broke the rising trend line off the June lows. $SPX may try to recapture that trend line early in the week ahead but it probably won’t be able to stay within the confines of that rising price channel for long. The 5,3,3 stochastic is oversold and suggest a bounce of one degree or another is at hand, but a bounce is not a bottom and there are too many other things going on that suggest we are not bottoming here.
Wilder’s ADX has been in a clear sell mode since early last week and now the ADX line appears to be bottoming and may soon turn up and then cross up through the falling +DI line, and that is not a good thing.
I don’t know if the market will bounce or not next week, but something like that can’t be ruled out, but even so, it should just be a bounce. You can’t have a bottom without a climax selling event or capitulation day and as I’ve said and will say until we get such an event, we’re not there yet.
Be careful. The key to buying when there’s blood in the street is to first make sure the blood is very, very dry.
GL in the week ahead.