After reading this and observing last Friday, one might suspect that AAPL had something to do with all of this. True to form, AAPL (the number one weighted stock in the NDX at 19.72%) had another volatile session, falling as low as a $505 intraday only to close higher, at $527.68.
We also point out a tremendous amount of volume (in terms of shares as well as dollar volume, given the north of $500 handle in the stock) that traded in AAPL on Friday, with more than 45 million shares changing hands versus ADV of approximately 28 million shares). Technology, via the tech heavy NDX and linked ETF, QQQ (PowerShares QQQ Trust), as well as specialized technology ETFs such as IYW (iShares Technology) and XLK (SPDR Technology)) if we recall so long ago (in the Feb-Mar timeframe of 2012 especially), was a relative strength leader in the equity markets for some time. Unfortunately for techs, AAPL’s swoon that began in September after the stock eclipsed the $700 level, has really worn down the sector and brutalized investors that were sitting on nice gains for most of the year.
We suspect that if AAPL does continue to bounce at these levels, we may see a respite in the selling pressure in the sector, which will likely attract sideline money back into the sector, and considering AAPL is significantly off it’s 2012 highs, it likely has room to run here given the right environment. Likewise, Friday’s technicals of the SPX (S&P 500 Index) look similar as the charts of AAPL and the NDX, with “hammer candles” being evident, with new, recent intraday lows being registered only to close net “up” on the day and at the high end of the intraday range.
Similar “technical” formations in the past have generally served as indicators of a potential reversal, so we will be very mindful and observant of what the early week action shows us, especially given the shortened Thanksgiving holiday week and anticipated “Black Friday” effects on retail names (and AAPL)?
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