Tuesday, October 2, 2012

Are Apple--and the Stock Market--Topping Out?

Stock prices around the world got a recent lift from central bank actions.  That was a nice cap to a strong quarter.

There are troubling signs, however.  Apple has driven the market for the past three years, and as analysts seemingly outbid each other in setting the highest target price for the stock (some have said $1,000), the stock has softened recently.  The stock is still up 63% this year and 256% over the past three years!  Until this year, the stock's 200-day moving average was a support level for when the stock became temporarily overbought.  The stock is well above the 200-day moving average of $580 now, however, so it could correct nearly $100 and still be at its moving average.

It's not just Apple that is showing technical troubles.  Market action the last two days was troubling.  Stocks were up sharply yesterday morning after an unexpectedly good report on manufacturing activity, but prices sold off in the afternoon.  Today's market opened higher but is selling off again.

This is on top of marked weakness in the transportation stocks, which did not share in the sharp gains of the past two months (non-confirmation of the advances of the Dow Jones Industrial Average).

I normally don't pay much attention to the market's technical patterns, but they are to me further reason to reduce stock holdings and to look for better values later.

Steve Lehman

S & P 500:  1,444
Apple:  $665

No comments:

Post a Comment