As AAPL goes, so goes the market

[bankedout]

Apple is the $764 Billion Dollar gorilla of the US Equity market:

finance.yahoo.com/q/ks?s=AAPL+Key+Statistics

Look at the Enterprise Value.

On the Monthly chart, we are in the 3rd leg up:



Switching to the Weekly chart for a closer look at this leg:


(click for a larger version)

I think it is starting to run out of steam. You can see a possible triple top forming. My guess is that if/when the $120ish level breaks to the downside, AAPL is going to come undone.

Looking around the list of highest average daily volume stocks on the US Exchanges, it is apparent that supply is overcoming demand in many on the list. There are still a few places for the elephants to hide (some financials and health care) but most on the list are in serious trouble already.

What is your opinion?

[bankedout]

A little bit of progress today:


click for larger image

We shall see if everything starts to come undone. I still see strength in some of the big financials and some healthcare stocks + a few miscellaneous stocks. My guess is, the party is winding down.

[bankedout]

click for larger image

Even the most die hard bull has to admit that something is wrong with AAPL now. I think that person also has to admit that something is wrong with the stock market also. Volatility has increased. I think it is safe to say, things have started to come undone.....

[bankedout]

Zooming in on the Daily chart:


click for larger image

We see that each rally has been successively lower. Meaning sellers are willing to take less and less for their shares over time, and buyers are willing to pay less and less for their shares over time.

Then also notice the circled area, where prices had to go down to find liquidity during panic like conditions.

My guess is we will some day look back at this time, as one of the best short sale opportunities ever. Not just for Apple, I mean the whole US stock market.

Time will tell, if that is correct or not.

[blygh]

I think you have a high probability of being right . A friend of mine who sold his company (internet advertising) last year has taken all his money out of the market - he predicts a Dow of 7000. The problem is increasing productivity. Productivity is deflationary which leads to higher unemployment which leads to recession because so many people cannot earn a living and hence cannot buy that which is being produced. What is happening in China is symptomatic of what is happening and is going to happen world wide. Why is unemployment in the US falling? I wonder about that - pent up demand and increased purchasing power from falling energy prices??
Blygh

[bankedout]

Thank you for sharing your thoughts blygh.

I don't watch TV or read any financial news, so I can't offer any opinions on fundamental reasons.

When I guess in my head about a reason, I think about our current President directing the Fed to blow bubbles no matter what the cost. Knowing he can't be re-elected, he may have eased off pressure on the Fed. If that theory holds true, a bear market would follow, and give the next President a chance to "rescue" the market. Again using the Federal Reserve.

That is just a theory.

The important consideration is individual US stocks. They are in horrible condition, and I think this recent little panic is an indication of what is to follow. The fragile state can be rocked easily from here.

While I can't say what level the Dow will go to, I think watching the current CBOE Volatility Index shows that those who write options on the S&P 500 think a potential large decline in price looms. These are generally pretty smart people (option writers).

We shall see how all of this unfolds.

[bankedout]

AAPL remains pretty weak, but I see fairly substantial money flowing in to other large stocks. So now I'm not so sure that AAPL is a good indicator. The US stock market seems fairly mixed right now. We'll see if AAPL can drag down the stocks showing strength.