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What Would Apple Do ? March 23, 2012

Posted by Tom in Thoughts.
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Could it be that simple?  Just watch one stock, Apple (AAPL) and that would tell you the direction of the market?

With the Dow weakest, the S&P 500 next and the NASDAQ Composite doing relatively well . . . is Apple holding this market up?  Well . . . kind of.  Apple is the darling of the investment news and it seems like everyone owns it or wishes they did.  But that in itself is a cause for concern because when every buyer has bought, who is left to buy (and bid the price up)?  If the price does not go higher, the “hot money” will go else where.  But is that time now?

I think not yet.  Let’s look at a chart of Apple below (click on it to enlarge):

charts courtesy of HighGrowthStock.com; used with permission.

The top color bar shows degree of Accumulation and Distribution; Green is Good, dark green is best.  So far, so good, strong accumulation.  The price bar chart shows that Apple price is relatively strong.  Sure it’s pausing and rounding over but it’s not headed down.  Volume on the other hand IS headed down.  Now lack of volume does not (in itself) mean weakness, just lack of interest.  Not to many buying, not to many selling.  Looks like folks are just waiting to see what each other are going to do next; and I think the market in general is waiting too.

It would be “normal” to see a 5-10% correction in here, since the market has run up fast.  I’ve been looking for it, but so far no correction.  No news to spark it, no really bad earnings, just waiting.  O.K., so I’ll wait too.  Sometimes staying invested is the hardest thing to do, like now.

What’s doing well?  The chart below shows the top 10 sectors as far as recent strength.

Continue to be watchful and have a good week.

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