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Stockhaven’s market take 12/5/12

We saw a mixed market today as the Dow rose 80, the NASDAQ fells 22, and SPX was pretty much flat. We also saw volatility start to erode, something I alluded to as a possibility last night. In my view a mixed day like this isn’t a good sign. I want to see the market moving upward together. I can’t imagine that some of the bearish signs that showed up today will be shrugged off much longer if they don’t correct themselves. 

  • AAPL big drop — AAPL suffered its biggest 1 day drop today since 2008
  • BAC breaks out — BAC made a huge move above $10 today to close at a one year high
  • FCX tanks — The largest copper miner in the world was down 14% after

To me the market clearly thinks AAPL’s downtrend isn’t a huge deal for the other indexes. This is where I think the market’s wrong. The NASDAQ has been the leader of the bull market and AAPL has been the leader of the the tech trade. Sure, you can make a bullish argument about how it’s a sign of strength the broader indexes didn’t plunge with AAPL, but that to me would be ignoring an all too important player in this market.

Ignoring the action in AAPL here is like your team winning on Sunday without their star player having a good day. Yes, they got the win, but you know your team can’t win every Sunday unless their star does his thing. I suspect if AAPL continues to fall, which I promise you it will, the market is going to be forced to pay more attention to the move.

So how did the market shrug off AAPL? Look no further than BAC, the bank surged 5% on its heaviest buy volume since March. The move helped pace the banking sector (XLF) higher, and resulted in a 52 week high for BAC. However, BAC was not joined by JPM, C, or GS in a move to 52 week highs, something I would have liked to see. Why? Because if this market is going to continue higher without AAPL, it will need a group effort from the banks.

That is especially true after the action in FCX, which dropped 15% and looks all but destined for a move into the $20′s. FCX has been a good barometer of global economic growth of sorts. Not necessarily in regards to the data itself, but in regards to the perception of the data. Being the largest copper miner in the world, a strong trend in FCX can be a macro sentiment indicator. If Wednesday’s action is any clue, sentiment could be about to turn even more negative going into 2013.

At the end of the day though we’re still right where we were at the beginning of the week, above 1,400 but below 1,420. The channel is pretty easy to see but at this moment the bears have the upper hand because they’ve forced 4 lower lows in SPY in a row. Today’s range was also the widest seen in SPY so far at the beginning of this month. Look for the range to be even wider tomorrow using a move below $141 as an invitation to short and a $141.87 (hod on Tuesday) as a trigger to go long.

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