Jack Steiman's stock picks, trade alerts, and technical analysis for swing traders!
Free Trading Newsletter:

Jack's Wrap - Apple (AAPL) Reverses Hard...Market Still In Good Shape...... RSS


Wednesday February 15th 2012
Apple (AAPL) Reverses Hard...Market Still In Good Shape......
by Jack Steiman www.SwingTradeOnline.com

This has definitely been the most interesting day of the year so far. The market tried gapping up again today, but that gap up took all the major index charts into overbought territory once again on those daily charts. RSI's near 80, once again, on the Nasdaq, with the S&P 500 also joining the party into overbought, with readings in the lower 70's. You just can't have the market staying overbought time-after-time after some small selling episodes. It's not healthy. The rubber band, eventually, snaps, and down you go.

Nothing was more overbought than both the daily, and 60-minute, charts of Apple. Scary overbought to be blunt. Apple's daily charts reaching 90-RSI, with the 60-minute chart reaching the unheard of mid-90's. I have warned when something becomes extreme--the price one pays can be devastating. Once again, that became a reality, with Apple snapping down nearly thirty dollars off the top. Look again. I said thirty (30$) off the top in, basically, an hour’s time, if not less. That's a rubber-band snapping in two. The type of pain the average retail player felt on that stock today is unbelievable. The largest volume of the year on the reversal means the stock will struggle for consistent upside for a while to come.

With that snap down in the stock came a strong reversal in the market. The Dow was down nearly one hundred points today isn't terrible, but well off the top. The Nasdaq and S&P 500 following the same script. Not terrible selling in terms of numbers, but well off the highs for the day. So, the bears get a chance to breathe a bit here as Apple should put some weighting on the market as it tries to find a bottom in the days and weeks ahead. In the end, however, nothing terrible is going on technically with the market. Just some time to pause is all.

So many of you are probably asking and wondering what the nasty and brutal reversal in Apple means for the market. Will it be the end of the bull run? Will the market just fall apart? The answer is no and no. The market is absolutely fine, even if it falls 2-4% from here. There are great earning stocks all over the place that will help keep a bid under this market and prevent it from falling apart. That won't happen. The market has massive support levels based on trend lines, gaps, moving averages, and horizontal support. People want in and will buy the dips. The market will not fall to pieces here. Not in the least. It will offer up some very good buying opportunities over time, if you're patient enough to let things come to you. So many stocks will set up in their bases and patterns offering good entries.

Again, patience is the key. As each individual stock sets up, it'll be worthy of a buy. With the earnings reports being so solid overall, although there are the usual bombs of bad reports, and with the economic news so decent these days, the market will not crash out. Think about it folks. Apple fell, basically, thirty dollars this afternoon, and the Nasdaq was hardly down for the day as many other stocks stepped in and were bought up enough to keep things from getting too intense to the down side. There was no market free-fall. Just good old fashioned overbought pullback selling. Do not take Apple's demise today to thinking we're done with this market. We're not. Things will set up once again.

With the selling today off the top we already have the Dow down to 57 RSI on the daily chart. Some deeper selling would be bests for sure. The Nasdaq is moving under 70, and the S&P 500 is below as well. It won't take too long to get the market down to levels where buyers will want to come back in. There are loads of players on the sidelines who want to get their dollar back into this market. When you're in a bull market environment, you don't want to wait for oversold on the daily charts before getting back in, because, if you do, you won't be getting back in any time soon.

Markets don't get oversold on the daily charts in bull markets. They certainly do on the short-term 60-minute charts, but they do not on the daily charts. So, you don't want to let good opportunities get away when a stock sets up the right way as the market pulls back. There will be lots of great set-ups as things unwind further, so be ready to take advantage of them as they spring up in the days and weeks ahead. Don't become a bear just because Apple put in an important topping stick of its own today. That won't derail the market bigger picture just as it won't derail Apple overall in time. Stay awake and aware of the opportunities that are about to set up over time.

Let's hope this market does test lower, which will unwind things further. Great support on the S&P 500 comes in first at the 20-day exponential moving average at 1328. Then we get the big support area, which was that long-term down trend line now at 1315. It was at 1320/1325 when we took it out, but as it's a down trend line it is slowly sinking further, which is a positive for the market. Below that there's still the 50-day exponential moving average to protect the bulls at 1293. Lots of good support also from gaps, etc. The bears will not have an easy job keeping the market sustainably down. Sure, some down side should be expected here, but it won't be anything too terrible, I don't believe. Let's watch stocks set up and see how these strong areas of support get handled.

Peace,

Jack

Sign Up for a Free 15-Day Trial
  • Intraday Swing Trade Alerts
  • Action-Oriented Trading Advice
  • Detailed Guidance for Each Trade
  • Technical Chart Analysis of Stocks/Indices
  • Market Timing from a Pro

Meet the Analyst

Jack Steiman Former columnist for TheStreet.com, Jack Steiman is renowned for calling major shifts in the market, including the market top in October 2007. More ...
As featured in...
Barron's


Who We Are


Enjoy Jack's daily market technical analysis FREE by signing up below.

We respect your email privacy.

Customer Comments View All

“I appreciate your mails more than you can ever know..over the years you have given me a feeling of understanding of something I truly wanted to understand..........from the old AOL chat rooms ( we loved it when you popped in ) thru today you remain the best of the best at teaching us old dog's how to survive these markets.........from the bottom of my heart I thank you for what you do and the way you do it”
— Billy Elmore Grand Bay, AL2013-01-03
“Jack was one of the few that warned us of a downturn that happened a week or so ago and he's correct again. He's one of the most important financial advisers to listen and pay heed to regarding markets. When Jack speaks, I listen! I wish others were as honest as Jack. I've gotten numerous emails saying it's crazy not to invest in this downturn, wanting people to pay them $50 for five stocks that will do great. Ha! Jack is one of the very few I trust, and I believe he really cares about the common man's welfare more than the almighty Dollar.”
— Anne Hargrove - WA2012-11-12
“"I'd like to thank you profusely for all the money I have made as a result of using your service and sage advice. I have made a TON of money using your service. I have learned a great deal about technical analysis from you, and it really works. I recommend your service to everyone I know. You are a great guide during these challenging times, and I highly value your thoughts and opinions. Keep up the GREAT work!"”
— Alex NasonStamford, CT3/31/11
“"Jack is BY FAR the only one of the millions of analysts whom I have been able to "connect" with in the way that he explains everything. He really gets the message across, and the best part is his results speak far more than anything else!"”
— Roberto AlvarezMesquite, TX03-21-11
“Jack brings passion for educating the individual trader about technical analysis. He wants to give you the edge he sees the pros using: a deeper understanding of technical indicators."”
— David MorrowEditor-in-Chief, TheStreet.com
“I've been a member for a little over 3 months now and have to say that I am incredibly impressed with your insight into the stock market. You've taught me some very important lessons with respect to patience, appropriateness and emotion. I pretty much rely on your alerts for trading (and usually regret when I don't!) - and your comments on the market are truly invaluable.”
— Nick GudkaCulpeper, VA02-14-11
“Jack, I used to run a trading desk on Wall Street and only wish I had a technical guy of your expertise. You are extremely good at what you do."”
— Michael DoctorHolmdel, NJ6/12/09
“I have taken many advisory letters over the past 30 years, but I have NEVER taken a letter which has the depth, common sense and knowledge which you display."”
— Rob LedbetterHenderson, NV
“You are freaking phenomenal, Jack! Thanks for a steady hand at the wheel in a time of great uncertainty."”
— Everton BaileyGreenacres, FL5/19/09
“My profit on your last 2 trades already paid for a year of SwingTradeOnline. My account is up more than 20% since I joined the service 4 months ago. Your analysis has made the difference."”
— Marilyn OttGreenwood Village, CO12-16-10
“I joined up a few months ago, and during that time, Jack has been consistently and repeatedly correct with market fluctuation predictions, based on his expertise with the chart analysis. Jack's priority is safety for his subscribers, and that has been a critical key particularly in this kind of market. I feel very confident in following Jack's buy and sell recommendations."”
— Joe PowellLaguna, CA
“Mr. Steiman, as I have followed him over the many years, has been quite informative and sometimes downright brilliant in his uncanny ability to pick a market and the stocks within."”
— Roland AudetSatellite Beach, FL
“Jack, I've been very impressed with your work. Smart calls, superb analysis, great market knowledge and an appropriate 'cautious optimism' summarize for me your take on the market and your work. Keep up the great effort!"”
— Guy NapierHinsdale, IL3/22/10
“Before signing up, I had been told that Jack was one of the best. I have now discovered that for myself. Over the four months I have been a subscriber, the value of my investment account has increased 140% thanks to Jack! In my investing experience, an incredible achievement!! His regular updates, honesty, personal touch, genuine interest in the well-being of subscribers, and trading knowledge and skills are unmatched in my experience with other trading services. I'm looking forward to a long association with SwingTradeOnline. Keep up the good work."”
— James TurnerSun City, AZ6/23/09
“Thanks for the thoroughness and persistence of the analysis. Nothing like it anywhere I know of." ”
— Steve KruvantSouth Orange, NJ10/6/09
“I just want to THANK Jack for providing information that a new investor/swing trader can use, understand and trust. Now when time is limited I only need to read SwingTradeOnline."”
— Robert MaherPort Charlotte, FL
“Jack, thanks for the guidance along the way. You have been spot on. Many thanks." -Trader1 | "Excellent commentary, thanks!" -Eddy | "Wonderful addition to your service. Great job!" -Richie | "Thanks for comments on stops & chasing weakness. I've been trading 2 yrs, lost thousands prior to joining SwingTrade! Thanks for all your help." -Toby”
— Comments In & About New Chat RoomChat Room4/27/10
“Jack, what a great reader of the market you are. Never too brash, just looking for opportunites whatever the market does. I really appreciate your comments and they help me to understand what is going on.”
— Roy HookerBrisbane, Queensland, Australia6/10/10
“Jack Steiman is excellent on short- to intermediate term timing for swing trades. For people looking for short-term swing trades both long and short as well as market direction, there's nobody better than Jack on the Web!"”
— Al SlaytonLos Angeles-based financial advisor and subscriber
“Educator, investor, trader ... Jack Steiman shows you how to move from emotion to "appropriateness."”
— David PennTraders.comJanuary 2007
“I look forward to reading your views each trading day. They seem to be the only steady, rational, based on experience opinions I have access to. There is so much 'doom and gloom', 'the apocalypse is imminent' fear mongering out there to wade through that, 'When all around you are losing their heads', I find your choice of wording, the tone of your daily emails very concise and helpful. All I want is a clear-eyed view, a steady hand on the wheel and the facts as I can digest them from someone whose opinion I've come to respect.”
— N. HarrisToronto, ON8/23/11
“Jack, I've learned more from you in the past few months than in all the previous 10 years I've been studying the market from other sources, especially on the subject of divergence and sentiment - probably the two most powerful technical indicators. Very educational!”
— Dean DunhamEnglewood, CO09-16-11
“"Jack, thanks for all your help. Because of your advice, I no longer feel like I'm driving down the Garden State Parkway with a blindfold on!"”
— Gary KlophausPipersville, PA10/24/11
“"I can't believe how thoroughly you run the service. It is FABULOUS! I am way up since I joined in April. Thank you, thank you Jack from my family of four!!!"”
— Tim ReynoldsDanville, CA10/25/11
“I've been a member of your service since May 2011, and I want to thank you for the valuable education that you provide. I've tried other services, but they don't provide the incredible level of analysis that you do. I now successfully trade less on hope and more on reason. The webinar is vital - I need to hear your voice of reason. ”
— Kim H.Palatine, IL12-05-11
“I've tried different services over the years and I have never had such a solid service as you provide. I enjoy the market comments and the trading discipline that you talk about. ”
— Ricky JaramilloHolualoa, HI2012-03-28
“i have paid for 3 years worth of zac in 6 weeks...and i haven't been playing the big moves or options. it's awesome.”
— "Guiseppe" - Trading Room2013-10-24
“Jack, as I hope you know, we all appreciate your helpful advice and teaching. This week you helped me a lot when you said Monday's action was a possible topping. When I saw your thoughts I sold my long positions. As it turned out I made a small amount. But of greater importance was the amount that I saved by selling the long positions. So as you have taught us, its not all about gains but avoiding big losses. So again, THANKS!”
— "ncdon" - Trading Room2013-12-13
Designed by Executionists