Apple Technical Analysis - Fed, Oil, and Fear

The Fed painted an ugly picture for the economy today, cutting growth estimates, and basically telling the markets that the rate cut cycle is over. The market sold off on the news, with the Dow down almost 250 points before rebounding a bit and ending at 12,601.19, down 227.49 (-1.77%). We got a double whammy with oil spiking nearly $4 to $135 a barrel, after the government reported a drop in gasoline inventories.

Would you believe me if I told you this is exactly what was needed? This will ratchet up the fear in a big way, evidenced by the put/call ratio moving as high as 1.35. In the process, we cleared out the negative divergences in the 60 minute charts and reset the oscillators. Fear is our friend.

In my previous analysis, I titled it Capital Preservation Time. That's because I felt a drop was imminent. So, hopefully you took heed and preserved capital when AAPL shot up in the morning. I had set the resistance at 188.70, it broke through that by a few points, it presented a logical sell point.

Also in this mornings analysis I had pointed to support at the twin 20s, the 20 day SMA and EMA, 180.70, and 179.20 respectively. I didn't think that AAPL would free fall through them both today. But it did, and ended under the 20 day EMA at 178.19 down 7.71 (4.15%). In the process it took out its uptrend support at 180 and change. AAPL had a great run, but it needed to deflate.

The S&P 500 lost its uptrend support at 1410, it now is left with its 50 day EMA. We have to expect things will settle out in the near term, perhaps some more selling, but advances are not likely. This is a good thing, as it will fully unwind the oscillators and kick the fear into high gear. We Bulls eat fear for lunch.

It's probably best to step away from your computer, take a breather and reflect. Not much to do here if your a Bull, other than to start planning your positions for when the market is ready to move. We're in a transitional phase right now, and so Capital Preservation is still the name of the game.