Wednesday, April 25, 2012
AAPL Boosts the Market as the Federal Reserve Announces Rate Policy
The story of the day was none other than AAPL producing fabulous earnings. On the negative side durable goods orders was much lower than expected, but failed to derail the euphoria surrounding AAPL’s earnings. The stock comprises 17% of the NASDAQ 100 and a nearly 9% move helped the NASDAQ finish higher by more than 2%. Volume was higher on the day and above average an encouraging sign. Ben Bernanke and the rest of the Open Market Committee held rates steady (continuing ZIRP), boosted their economic forecast, and said they would remain ready to step in when needed. A positive day for the markets and day one of an attempted rally pushed the Big Wave Trading market model to neutral. We’ll be looking for a big volume up day of more sometime between days four and seven. Day four will occur next Monday on month end. IBD uses 1.7% on the NASDAQ, but we’d take 1.5% on very strong volume to confirm a new market rally. Any new buys here would be very small for us, we want confirmation of a new rally before stepping into the waters. AAPL is very likely to digest the current move and will hold down the NASDAQ. Of course, the stock could power higher from here. However, we have seen stocks like UA pull back after earnings and AAPL probably will not be any different. Remember, we saw quite the price destruction from the end of March and it will take some time to repair the damage. It is wise to stay patient and strike when the odds are in our favor. This market continues to be a difficult one to manage! We have repeated this sentiment since this uptrend began. It would not surprise us to see this market push higher from hear testing the 50 day moving average. And with the Federal Reserve continuing its ZIRP anything is possible here. Like it or not, the Fed will continue to print money when needed to save this market. Stay disciplined and you’ll come out of this all right! Cut those losses!