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!

AAPL Blows Away Earnings as Stocks end Mixed on Light Volume

Disappointing housing market numbers kicked started the morning economic news, but a better than expected Richmond Fed Manufacturing index was a nice surprise. While the rebound outside of the NASDAQ was nice to see the lack of volume was quite unimpressive. The real story would come out in the after-hours session with AAPL reporting its earnings. Blowing out another quarter of earnings AAPL was able to surprise the street again with fabulous numbers. Closing out the after-hours session, the stock closed off its highs, but above the key $600 psychological level since last week. Today’s session was really lackluster with not much to hang your hat on besides AAPL. AAPL will take a back seat to Big Ben and the Federal Open Market Committee’s policy statement and rate announcement. The Fed isn’t about to raise interest rates any time soon, but the market would like to hear the Fed go beyond 2014 and state rates will remain low until 2015. May I remind you that is a full 6 years from the bottom. In 1920, the economy suffered a terrible recession (the last great recession before this one) and by 1921 the economy bottomed out and pushed higher. While there was considerable pain the rest of the 20s roared. Is the economy so bad the Fed needs to keep rates this low? ZIRP is not working and neither is pumping in further liquidity. This debate will not matter, only the direction of the market matters and it continues to be down. A key indicator is the 50 day moving average and the S&P 500 and NASDAQ remain below this key moving average. I am sure we could see the prices jump back above this moving average, but with the current damage waged by sellers it would take a miracle to manage a new rally. Let’s also not forget we are close to May and very few uptrends have EVER started in after May. August would be the next probable month a new rally may actually begin. We’ll most likely see a lot of chop and lower prices over the next few months. Be prudent. Volume will likely get a boost tomorrow as everyone in the world will try and position themselves after the Fed announces its decision. Perhaps we’ll get the NASDAQ to produce Day one of an attempted rally, but the odds are not in favor of a new uptrend forming here. Its all about price! Stay focused on it.