According to Fidelity.com, Apple, Inc. (AAPL) represents 12.95% and 6.51% of the QQQ and SPY, respectively. The QQQ and SPY are exchange-traded funds that track the NASDAQ 100 and S&P 500 Index respectively. That's a very large weighting, so it would seem to make sense that AAPL's influence will play a big role in the overall stock market direction. That's not great news, considering that AAPL broke down yesterday below a key price support level of 129.50 from the June low:
AAPL had established critical price support at 129.50 on June 16. Volume that accompanied this breakdown was heavy, considering that it was the normally light volume period between Christmas and New Year. You can see in the bottom panel that AAPL is completely out of favor and has been underperforming the NASDAQ 100 badly since the beginning of November. If the NASDAQ is to turn higher from here, it's going to need help from AAPL. We must respect this breakdown until AAPL can clear certain upside hurdles. For me, step #1 is to close back above 129.50. You can see that AAPL has recovered more than 3% today and is currently just above 129.50. But where will it close today? Step #2 will be to clear overhead price resistance at 134.50 and the 20-day exponential moving average (EMA), currently at 136.36 and falling rapidly. Time will tell if there's enough buying interest at this level to prompt these moves higher. For now, however, we must assume the AAPL breakdown is not a good signal for the health of the overall market.
While a stock like AAPL certainly carries big influence, there are many other signals you need to watch as 2022 comes to a close and you open the book on 2023. That will be the topic of our fourth annual MarketVision event:
"MarketVision 2023 - The Road Ahead: Navigating An Uncertain Market"
This is a FREE virtual event and one that should be attended by anyone with an interest in U.S. equities. For more information and to register and save your seat, CLICK HERE. We will reach capacity, so please be sure to register TODAY!
Happy trading!
Tom
