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AAPL Drops Below 50 DMA After Hours As Stocks Retrace 60% Of ISM Spike

Tyler Durden's picture




 

Equity indices managed to close green on a generally lower-than-average volume day but while the morning was dominated by a 20pt rip post-ISM's 4.5-sigma surprise, the post-Europe-close afternoon session saw us give back over 60% of those gains on rising volume and average trade-size. As the day-session closed, ES (the S&P 500 e-mini futures) was right around yesterday's highs and today's VWAP in a relatively balanced manner but after-hours was leaking lower still. AAPL also had a big rotation day as it opened red, surged into the middle of the day then gave it all back to close within a few pennies of its 50DMA (and in fact is trading below it in after-hours trading). Stocks pushed well ahead of credit markets as they rallied and HYG was far less impressed. Sure enough by the close, equities had limped back in line with credit's reality but in the meantime, HYG was back down at last Wednesday's levels. The ISM caused the USD to pop, stocks to pop more, oil to pop about the same and gold/silver/Treasuries to drop. The post Europe-close action saw stocks give back most of those gains, the USD leak back lower (as CAD strengthened), Oil maintained it bid over $106 (month highs) and Gold/Silver pulled back up nicely. Treasuries remained under pressure though with only a very late-day dip lower in yields to show for the dips in stocks (but convergent with stocks in the short-term). As expected, Energy and Financials outperformed close-to-close on a rally-day but also retraced the most in the afternoon as Discretionary and Materials also joined the high-beta fray. The strength in oil and weakness in TSYs was enough to juice risk-assets in general and provided some support for the rally but stocks remain rich relative to risk in general and we wonder how the bulls have it both ways - rally on unsustainable good news (but no QE3) and on bad news (Ben's got yr back) as the first day of May (absent any European hedging) seemed a chaotic rush to buy this morning that may have been a short-term climax.

 

ES flip-flopped from the bottom of its trend channel to the top and found notable resistance up there - ending up giving over 60% of that ISM spike back by the after-hours close.

The ironic thing on today's action is the fact that we topped out at the European close (when Europe was pretty much entirely closed anyway) - someone must have forgotten to tell the machines...

AAPL lost its 50DMA after-hours as its price actin of the last few days has mimicked the same price action heading into earnings (though on lower volumes)...

But credit markets were quiet in general and remained much less sanguine than stocks. ES managed to retrace pretty all if its excess to credit by the close and HYG lost notable ground into the close...

And while Treasuries were relative underperformers today, by the close, stocks (blue) had retreated back in line with bonds (red) and at the same time Gold (gold) and the USD (green) were also back in line...

But with stocks giving back some of their hope, our earlier note on energy prices seems prescient as Oil stole the show today with WTI back at five-week highs...

Charts: Bloomberg

 

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Tue, 05/01/2012 - 16:35 | 2389250 razorthin
razorthin's picture

Crashy smashy shooting star print on IWM today.  Lookout.

Tue, 05/01/2012 - 16:44 | 2389286 Village Smithy
Village Smithy's picture

That was a ridiculous ride.

Tue, 05/01/2012 - 16:54 | 2389322 andrewunknown
andrewunknown's picture

That would be a shooting star if the immediate trend or at least the previous day closed higher.  But, it didn't.  Instead IWM's daily is a doji star, which - as with the similarly constructed inverted hammer (see AAPL today, for example) - is tentatively bullish, not "crashy smashy". 

Tue, 05/01/2012 - 19:23 | 2389615 razorthin
razorthin's picture

Wrong, but entertaining.  Shooting star is a single candle and does not need a context.  However, I would argue that the immediate trend is higher (last serveral days of trading).  It is always a potentially bearish signal.  Recall those ridiculous ones on the weekly/monthly charts in 2008.  Of course it needs confirmation.  We'll see.  My trusty McGinley Dynamic is flashing, "get the fukk out".

I wouldn't stick an uncovered dikk out even if it was yours.

Wed, 05/02/2012 - 00:29 | 2390286 Freddie
Freddie's picture

I was looking a a bar chart.  It looks like IWN shot up but closed close to the low of the day.

Wed, 05/02/2012 - 00:59 | 2390315 andrewunknown
andrewunknown's picture

Really? Show me one source on candlesticks defining a shooting star as a single candle pattern where "context" is unnecessary and I'll show you 100 that support what I wrote.  Or just try googling "shooting star pattern".  If a doji/spinning top does not close at (or at least very close to) or above the real body close of previous period, it is not a shooting star.  If the name weren't indicative enough, as Steve Nison notes the Japanese refer to the shooting star as "trouble overhead" (Nison, The Candlestick Course, p. 31) because of its orientation.

Of course the 05/01 candle is "potentially bearish" (isn't every pattern?): on that we agree.  Price can do whatever it wants.  Outcome will vary, but that doesn't somehow alter the construction of the candle, or the term commonly applied to it.  And in fact, a doji star (which this is) preceded by a down period/trend has the same implication as an inverted hammer, which is commonly interpreted as a "bottom reversal line" (Nison, Japanese Candlestick Charting Techniques, p. 77).

Wed, 05/02/2012 - 23:14 | 2392900 meimei
meimei's picture

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Tue, 05/01/2012 - 16:38 | 2389258 The Axe
The Axe's picture

This would be nice information, unless of course nothing at all makes any sense other then the buy orders that are on Brian's desk at the NY Fed.

Tue, 05/01/2012 - 16:40 | 2389267 Cdad
Cdad's picture

That HYG trade just looked horrible today.  And as for APPL, the bears will have their way with that one now, as there are still way, way too many folks in that name...folks that could not contemplate the obvious math behind that market cap move from Jan-March.  Those folks will now be converted...into weak hands.

Tue, 05/01/2012 - 16:58 | 2389349 robertocarlos
robertocarlos's picture

Wait for it to hit 1000 and then get the hell out of Dodge. That's the plan man.

Tue, 05/01/2012 - 16:59 | 2389350 derek_vineyard
derek_vineyard's picture

as i age i can relate to short term climax

Tue, 05/01/2012 - 17:11 | 2389399 Randall Cabot
Randall Cabot's picture

Russell slid from 15 points green and ended red. Very interesting.

Tue, 05/01/2012 - 17:48 | 2389465 bernanke's wors...
bernanke's worst nightmare's picture

Yep.  Sticking to my Russell 2000 at 500 by end of October 2012 prediction.

Tue, 05/01/2012 - 17:11 | 2389401 Spastica Rex
Spastica Rex's picture

I was at our new Goodwill store on Saturday; I bought a new (to me) plaid shirt for $2.50. I saw many, many people milling about talking or texting on their iPhones. One lady was sitting on an old gold velour couch with an iPhone and an iPad.

Tue, 05/01/2012 - 17:15 | 2389408 Id fight Gandhi
Id fight Gandhi's picture

It lost the tenkan sen and kumo on a short term chart. T/A is really saying short or get out.

Tue, 05/01/2012 - 17:18 | 2389411 XtraBullish
XtraBullish's picture

Generational top in AAPL last month above $640 next stop $435 then $320...and the S&P will crap out with AAPL while the metals decouple.

Tue, 05/01/2012 - 19:03 | 2389599 I am a Man I am...
I am a Man I am Forty's picture

Have you called the world and told them not to buy iStuff?  Or are you using mental telepathy?  Or are you just wrong?

Folks, anything below 580 is a buy.  Preferably the 560's if it gets there.

 

Tue, 05/01/2012 - 19:32 | 2389649 Mark123
Mark123's picture

You have all it takes to sell stocks (ie an empty skull and lots of self confidence).  Why is $560 such a buy?  Would you have said so when Apple was selling in the $300's not so very long ago??  Does Apple have an eternal lock on all trendy consumer electronics?  Have you tried a Galaxy phone lately?

 

If you are saying it is a good momentum play at $560 then that is another matter. 

Tue, 05/01/2012 - 20:44 | 2389797 realtick
realtick's picture

Sounds about right: http://i48.tinypic.com/259zs4h.png

 

Tue, 05/01/2012 - 17:20 | 2389414 Sutton
Sutton's picture

Fade May Day

Tue, 05/01/2012 - 17:25 | 2389422 Downtoolong
Downtoolong's picture

Time to call  Cramer again. He was recommending a buy up to $700. Maybe he will trade you some of his $40 GM stock for your shares of AAPL.

 

Wed, 05/02/2012 - 06:12 | 2390498 writingsonthewall
writingsonthewall's picture

I hear Cramer has a LOT of Bear Stearns shares....

Tue, 05/01/2012 - 18:26 | 2389529 I should be working
I should be working's picture

We're all worried about AAPL because it closed flat on the day?  Algos just bid it up and no one chased, so here we are back at 580.

I will note after the last Quarterly report AAPL rampfest last July the stock retraced 13% from it's high.  13% off 644 is 564, right about the low before our after hours short squeeze last week.

The hot money is finally leaving and hopefully the ride will be less bumpy for a while.

Tue, 05/01/2012 - 23:41 | 2390217 CvlDobd
CvlDobd's picture

You're not paying attention. It was up pretty good mid day and someone took that opportunity to sell into strength.

Tue, 05/01/2012 - 18:27 | 2389543 Chartist
Chartist's picture

the russell 2000 is showing a head and shoulders top...AAPl is not in the russell 2000 but the RUT seems like a good barometer of speculative fever.

Tue, 05/01/2012 - 19:22 | 2389632 matt_chart
matt_chart's picture

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Tue, 05/01/2012 - 19:41 | 2389664 Mark123
Mark123's picture

With primary dealers sitting on all that money printed by the Fed, what is to stop them running up stocks almost endlessly?  It only becomes a problem when people lose faith in the uptrend and cash out of the casino (the banksters don't want anyone other than themselves and their insider friends cashing in!). 

The primary dealers control the market...so they set the market price.  Their main job is to manage the flow of new money into the market, then carefully steal it using market ups and downs.

Tue, 05/01/2012 - 20:44 | 2389795 orangegeek
orangegeek's picture

Apple is diverging with the NASDAQ100 - http://bullandbearmash.com/index/nasdaq/hourly/.

 

Not a good sign for the index.

Tue, 05/01/2012 - 20:58 | 2389816 bnbdnb
bnbdnb's picture

Fading Europe close tells me Europe was the one buying???

Wed, 05/02/2012 - 03:17 | 2390394 2012wiki
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Wed, 05/02/2012 - 06:10 | 2390494 writingsonthewall
writingsonthewall's picture

I think the Apple story sums up the whole situation of the world today (and what's wrong with it)

 

You have a decent product, but the hype and deception around it (to generate profits) is akin to a cult.

 

As with most cults the participants are likely to end up disappointed or dead (in financial terms - broke) when they realise their messiah was never actually more than a slippery con artist.

 

WE also have a serious case of denial - some people have gone so 'all in' on Apple that they get extremely angry when anyone tries to shed light on their behaviour and the unqualified faith they have in Apple.

 

If you look at the pattern of Google, Microsoft and all the other 'big cult followings' - you will see they ended their crazy period about 1/3 of the peak value.

 

This is why I am convinced Appl will be a 200 share in less than 3 years from here - the big drop will come the first time they miss earnings.

....which is inevitable of course - because the numbers are simply irrational. If Apple were to hit their target every year, they would need every man woman and child in the US to own an apple product - and be prepared to change it annually.

This is NEVER going to happen.

 

I think most Appl investors think they can jump ship when it starts sinking - sadly too many people have this same beleif - which will CAUSE a serious fall in the share price at some point.

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