Wednesday was the 7th straight positive session for the S&P 500 as we are now in another one of those "V shaped" rallies that have marked the 4 years of quantitative easing. Once the market turns up it has a habit of going vertical. It is now up 9 of 10 sessions in a row as well. The S&P 500 put on a rally in the closing moments to finish up 0.31% while the NASDAQ was down 0.11%, mostly due to Apple being down over 5%. It is fair to say the market is short term overheated and could use a few days of sideways type action. There was little in the way of economic data today.
All the index charts are looking promising now, if overheated short term. The best case scenario is a "flag" forming over 1-3 days to let some stocks rest and their moving averages catch up to them, and then a new leg higher sometime next week. If we just continue up with no rest it creates a less stable foundation.
Apple's unveiling of its iPhone 5C was less exciting than anticipated and brokers came out en masse today to downgrade it. The stock took a major hit.
Apple a sharp hit on Wednesday after a trio of high-profile brokers downgraded the stock, citing disappointment about the high price of the iPhone 5C and lack of a deal with China Mobile. The moves followed Apple’s introduction on Tuesday of the iPhone 5C and iPhone 5S. The price on the 5C model was much higher than most analysts had predicted, giving rise to worries that the phone will not help Apple expand its base into the fastest-growing segments in the smartphone market. A top area of concern is Apple’s ability to grow its revenue base, given that the higher end of the smartphone market is showing signs of saturation, and the iPhone now competes with other capable devices like the Samsung Galaxy S4.
Baidu, the Chinese "Google", is a stock we have highlighted a few times in the recent past. In this longer term chart you can see that when a long term trend changes it can lead to a powerful move. This stock was in a downtrend for well over a year, but one earnings report changed that and it has had a stellar run of late - today was another powerful move up.
Casino stocks with Asian exposure have also been on fire lately - Las Vegas Sands (LVS) and Melco (MPEL) are two names who have gone parabolic.
Despite a pullback in Syrian tension some energy stocks continue to act very well; here is one example of a chart showing fantastic relative strength.