Monday, March 05, 2012

AAPL weighs on the NASDAQ and the rest of technology stocks

A positive surprise from the ISM non-manufacturing index and factory orders did not deter sellers from taking aim at AAPL. Getting hit hard at the lows AAPL was down more than 16 points dragging the NASDAQ way down with it. Volume ended lower on the NASDAQ, but for AAPL volume was 85% above its average volume. It was clear the action in AAPL weighed heavily across the technology sector as other big cap technology stocks were among the hardest hit. On the bright side, small cap stocks were able to inch out gains on the day. Small cap stocks have lagged quite a bit as of late, but today they were able to notch gains. Both the NYSE composite and S&P notched distribution days bring their totals to 4 and 3 respectively. What is notably happens to be the NASDAQ which has only 2 days of distribution. Perhaps a shot across the bow here with AAPL’s action and with the NYSE sporting 4 days of distribution we certainly throw caution to the wind.

On February the 15th AAPL staged a major reversal on gigantic volume. The stock was able to power past the reversal, but it is clear distribution has begun to mount for the stock. We won’t know if the party is over until its over, but further price destruction will certainly give the impression the stock has exhausted buyers. Let’s face it, with nearly 4300 funds owning the stock it is tough for more support to come to AAPL’s rescue. Have a plan and execute.

An interesting stat has popped up and that is the amount of stocks above their respective 20 day moving average is hitting a point where stocks have bounced. This is quite the imperfect indicator and should be used more of a talking point than anything else. It will be interesting to see how this market works out over the next few days. Friday’s jobs report will certainly usher in a few more fireworks to the week.

Get out there and execute your trading plan. Your first priority is to know your risks by knowing your exits. Profits take care of themselves, losses do not. Cut ‘em.

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