Courtesy of Sabrient Systems and Gradient Analytics
Markets attempted to rebound on Wednesday after two days of fear and loathing, but extreme weakness in Apple (AAPL) held back the Nasdaq and S&P 500 while the Dow was able to finish positive. Whether this is just a dead cat bounce remains to be seen. Without a doubt, this week has changed the technical picture from bullish to iffy.
After Apple’s disappointing earnings report on Tuesday after market close, Raymond James said that Apple is now shifting from its previous levels of “obscene” growth to “normal” annualized growth of about 20% for the next several quarters. On the other hand, Symantec (SYMC), Altera (ALTR), and Juniper Networks (JNPR) all reported strong results and were up big on Wednesday, as the Tech sector led in spite of Apple. Still, there is huge anticipation of an iPhone 5, iPad mini, and Apple TV later this year.
The main drag on stocks is once again Europe, with Greece the main culprit. The IMF voiced renewed concerns about Greece’s ability to service its debt. In addition, Spain and Italy each instituted various limitations on short-selling. All of this has served to send the PowerShares DB US Dollar Index Bullish Fund (UUP) to 52-week highs, which typically implies weakness in U.S. stocks and commodities. Nevertheless, the dollar remains in a longer-term downtrend, which should be encouraging for stock investors.
The Greek 10-year bond is again yielding nearly 28%. Spain’s 10-year bond yield has burst through resistance at 7% and has been making new highs near 7.5%, while Italy’s 10-year yield has pushed convincingly through 6% and now trades around 6.5%. European bank stocks were weak as a result.
In an interesting side note on Wednesday, the House approved a bill sponsored by Ron Paul to give Congress greater scrutiny over the Federal Reserve and to make their operations and monetary decisions more transparent. As you know, Paul blames the growth of government and the rising federal deficit on the Fed’s stimulus programs. A companion bill is being introduced in the Senate by his son Rand Paul.
The SPY closed Wednesday at 133.96, which is clinging to the breakout level of the prior bullish ascending triangle formation. Some of my readers have taken issue with my reading of the chart, suggesting that I am displaying a bullish bias. One reader…