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Stockhaven’s Market Take 1/23/13

The S&P500 continued to inch up towards 1,500, adding 2 points to close just shy of 1,495. Even with the new all time highs, I still reiterate my view that this is a good sell zone in the markets. Here’s a few reasons why:

  • Google & IBM’s deceiving big gaps — The 2 tech bellwethers had solid days, gapping up on positive post earnings reactions, but actually finished closer to their lows of the day than their highs
  • Dow Transports stalls out — After making a new all time high, the index went red, then green, and then closed pretty much flat
  • AAPL’s defying tank job — For anyone who’s been trying to argue with me that AAPL was carving out a bottom, umm… you lose

 Stockhavens Market Take 1/23/13

S&P 500 Index 01/23/13

Google and IBM’s earnings reports were well received, as both stocks gapped higher and traded to their highest levels since October. However, both were unable to close near those same levels, and actually finished closer to their lows of the day. By the end of the day, both were still sitting on gains of 5.5% & 4.4%, but from a momentum perspective, I would’ve liked to see them finish closer to their highs for the day. Watch each of their daily lows ($735.79 for GOOG & $203.36 for IBM), as they’ll need to remain above them in order to build upon the positive post earnings momentum in the immediate term. 

The Dow Jones Transportation index tagged another new all time high today, the 6th consecutive day its done so. However, the index was unable to remain near its high, and actually went red before finishing just north of the break even line. The candle today looks very similar to the one from 1/11/13. A break above the 1/11/13 (a Friday) high on the following Monday, triggered what has been a 7 day win streak for the index. A similar set up is now here, as a break above or below today’s range will likely signal the next move in the immediate term, with closes in between the range signaling a consolidation period. Today’s range was 5,734-5,783.

QQQ finally notched a daily close above the key $67.50 level, thanks in large part to GOOG & IBM, but that was completely undone after hours when the ETF got spanked thanks to AAPL. AAPL’s stock saw an extremely negative reaction after hours to its earnings report and guidance, falling 10% down to the low $460′s. As a result, QQQ finished the after hours session in the $66.50′s, and looks like it will give up its gains from the last 2 days.

Given this price action in AAPL, the stock looks destined for $400, and eventually a move towards $350 (which would be just about a 50% retrace from the $700-$705 all time highs). I am looking forward to learning a lot about this market on Thursday in regards to if it really can move beyond 1,500 with AAPL falling by the way side. If the S&P500 can break above 1,500 and advance to 1,515 within 1-2 sessions of the 1,500 break, I too will become a believer that we can take out the all time highs without technology (and AAPL) leading the way. If I see 1,480 before 1,500 though, I’d suspect we’re setting up for a test of support near 1,450.

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