Is FAANG Weakness Bearish for Stocks?

The spotlight has been on FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) for much of this bull market, but lately it’s gotten kind of quiet around them. Perhaps that’s because they are actually under-performing the Nasdaq-100.

Is FAANG weakness bearish for stocks?

FAANG vs Nasdaq-100

The chart below plots an equal weighted FAANG index against the Nasdaq-100. The dashed lines highlight non-confirmations.

The black lines mark times where new Nasdaq-100 highs were unconfirmed by FAANG (as currently the case), the blue lines mark times where new FAANG highs were unconfirmed by the Nasdaq-100.

Since 2014, there have been 7 similar non-confirmations, where FAANG were lagging the Nasdaq-100. The last 4 very followed by micro pullbacks and renewed strength for both. The first 3 saw slightly larger pullbacks before renewed strength.

It was actually more of a warning sign when the Nasdaq-100 failed to confirm new FAANG highs (August and December, 2015 – blue lines).

Based on the short available history, FAANG under-performance is not bearish for stocks in general.

Nasdaq-100

The Nasdaq-100 QQQ ETF chart looks more bullish than bearish, as trade is above long-term Fibonacci resistance at 181.80, and on the verge of breaking out of a triangle formation.

Above analysis was initially published in the August 26 Profit Radar Report. Barron’s rates iSPYETF as “trader with a good track record” and Investor’s Business Daily says: “When Simon says, the market listens.” Find out why Barron’s and IBD endorse Simon Maierhofer’s Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron’s rated iSPYETF as a “trader with a good track record” (click here for Barron’s profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, 24.52% in 2015, 52.26% in 2016, and 23.39% in 2017.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Apples Bounces from Key Support

Apple’s slow slide lower accelerated earlier this week after falling through trend line support at 125.

This trend line buoyed prices seven times since mid-March (blue ovals), but the jug can only go to the well so often before it breaks.

Once Apple (Nasdaq: AAPL) broke below 125, it quickly moved to 120 on high volume.

120 is important, because it represents the November and January highs.

It just so happens that the 200-day SMA is just below 120.

The 200-day SMA is the go-to indicator for many investors, which ironically makes it more susceptive to whipsaws.

With or without whipsaw, 120 is an important level to watch.

Another important level (based on the log scale chart) is 116.

In terms of AAPL’s ‘summer to-do-list’, there are open chart gaps at 114.36 and 99.96, which may want to get filled

July 21 is an important date if you’re thinking about buying or selling AAPL. That’s when AAPL releases its earnings (after the bell).

AAPL tends to pop the day after earnings (pink), but that’s not guaranteed. The last all-time high occurred the day after earnings, and it’s been down ever since.

According to UBS, half of AAPL’s revenue growth cames from China. According to FactSet, China accounts for 16.2% of AAPL’s total revenue. Chinese stocks are down 30% since June 5. This could make its way into earnings … and spook investors.

AAPL seasonality suggests being careful in July and early August. Click here for AAPL seasonality chart.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

 

I Spy … The Most Insightful AAPL Chart

Apple is the most important stock on planet earth.

It’s the biggest component of the S&P 500 (NYSEArca: SPY) and Nasdaq (Nasdaq: QQQ). As of March 18, it will also be part of the Dow Jones, where it will rank as #6 of 30 (at least initially). Not bad for a “newcomer.”

The ebbs and flows of AAPL will affect almost every corner of the stock market universe.

When AAPL coughs, the market will get a cold. What are the odds of AAPL catching a cough?

Historical Dow Jones Curse

Historical data shows that inclusion into the prestigious Dow 30 club is more of a blessing than a course, at least short-term. 9 of the 15 components added since 1999 lost on average 6.3% within the first month.

Technical Blessing?

I invite you to inspect the AAPL chart with me.

Support: Green lines at 120 – 122.

Resistance: The chart only shows one red line, but there are actually two red lines (one going back almost 20 years) converging around 140. Prior to that, there’s black trend channel resistance around 132.

Interpretation: Although the brief spike above the black trend channel (accompanied by a bearish RSI divergence) could be a throw over top, I personally favor higher prices as long as AAPL stays above 120.

This is in conflict with the ‘Dow curse,’ but in harmony with AAPL seasonality (view AAPL seasonality chart here).

Sentiment may also support further AAPL gains, as the iWatch failed to garner much excitement (it’s easier to beat low expectations).

• Bloomberg: Apple watch is a really poor product
• MarketWatch: 3 reasons to think twice before buying Apple watch

Summary: Support at 120 – 122 deserves being watched closely. I favor further up side as long as support holds. However, a close below 120 cautions of a deeper correction.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013 and 17.59% in 2014.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Immediate AAPL Down side Risk: 10%

Apple shares (Nasdaq: AAPL) have been flying below the radar. AAPL is moseying around near all-time highs without making a big splash.

The weekly AAPL log scale has the potential to stir up this sea of tranquility.

There is strong support around 100. A look at the daily chart shows an open chart gap at 99.96.

Complex Analysis Made Easy – Sign Up for the FREE iSPYETF E-Newsletter

Chart gaps often act as magnets, and the allure of the gap combined with strong support could cause a 10% correction.

The daily (non-log) chart also shows trend channel support around 106.

The short red line has served as resistance and may continue to do so.

Near-term support is around 106, but failure to hold 106 should lead to 100, which may be a good buying opportunity.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

New Trend? Dump AAPL to Buy MSFT?

For most of the 21st century Apple has been cool, while Microsoft couldn’t do more than drool. But things are changing (at least for investors). Microsoft has gone from ‘drool to cool’ on Wall Street. Will this surprising trend last?

Apple is hip and cool. Microsoft is boring and outdated. Apple (Nasdaq: AAPL) is in, Microsoft (Nasdaq: MSFT) is out.

That’s been the case most of the 21^st century, but there’s been an odd shift lately.

Investors are picking MSFT over AAPL.

If Microsoft’s Cortana had a voice in this article, she’d point out that investors are dumping Siri to be with Cortana.

The charts below show that Cortana may be right.

The MSFT:AAPL ratio chart shows the ratio bounce off a 1-year support level. If the ratio can overcome near-term resistance it is likely to climb further.

This would suggest MSFT will continue to outperform AAPL, at least for a little while.

A look at history, in particular recent history shows that September is a particularly painful month for AAPL investors. Click here to view a detailed look at AAPL seasonality.

AAPL and MSFT are the two biggest components of the PowerShares QQQ ETF (Nasdaq: QQQ), which sits right above important support (QQQ support level shown here).

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

AAPL Drops Right Before Annual ‘Shock’ Period

A bigger and better iPhone, the new iWatch and new AAPL all-time highs … Apple has a lot of good things going. But, ironically this exciting time of the year (in terms of product launches) is the most treacherous for Apple shareholders.

Autumn is an exciting time for Apple geeks, but a treacherous time for Apple (Nasdaq: AAPL) shareholders.

Product rumors are planted in the spring and ripen in the fall as rumors mature towards tangible reality. Apple fans are hoping to feel, touch and buy a big screen iPhone or even an iWatch.

Ironically the autumn excitement doesn’t spill over to AAPL shares. September 21, 2012 was the kickoff for a 45% correction and August 19, 2013 saw a 12% pullback.

The August 24 Profit Radar Report summed up Apple’s position like this: “AAPL rallied to new all-time highs. As the chart shows, AAPL is just above green trend line support and just below red trend line resistance. AAPL seasonality points higher for another few weeks before the biggest seasonal weak spot of the year (AAPL topped on Sep. 22, 2012 at 705, split-adjusted). In short, the path of least resistance is up, as long as AAPL doesn’t close below 100. Danger will rise in mid-September.”

A detailed full-year AAPL seasonality chart is available here.

The chart below shows the various trend lines and support/resistance levels mentioned.

AAPL sliced below 100 on Thursday. Support around 100 has now become resistance. Green trend line support is at 97.

Based on seasonality, risk is rising and the path of least resistance is down as long as trade remains below 100 – 101.

Apple’s ‘bad Thursday’ spilled over to the Nasdaq-100 as the PowerShares QQQ ETF (Nasdaq: QQQ) painted a big red candle.

Thus far, QQQ remains above support at 99. A close below 99 may elicit more selling.

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

What the Seasonality Chart Predicts for Apple (AAPL)

Many forces affect the market and individual stocks. Seasonality is one of them. In fact, AAPL seasonality shows a distinct drop in September, which is when AAPL started its 45% decline. Here’s the full seasonality chart.

In September 2012, Apple (NasdaqGS: AAPL) accounted for 20% of the Nasdaq-100 and 5% of the S&P 500 (NYSEArca: SPY).

AAPL was the single most influential stock in the financial universe, the MVP of the Nasdaq and S&P 500.

It was back then when I decided to put together an Apple seasonality chart for Profit Radar Report subscribers. Apple seasonality is based on daily price action going back to 1998, which is the year Steve Jobs came back to U-turn Apple from near bankruptcy to profitability.

Since 1998, AAPL has gone from $1 to $100, so the seasonal bias is distinctively bullish in most months. The biggest exception is September.

AAPL seasonality was one of the reasons why the Profit Radar Report turned bearish on Apple and issued this, at the time shocking recommendation, on September 12, 2012:

“Aggressive investors may short Apple (or buy puts or sell calls) above 700 or with a close below 660.”

AAPL seasonality shows some weakness in mid-July, but projects higher prices from early August to mid-September.

The interesting thing about AAPL seasonality is that it doesn’t really match up with S&P 500 seasonality. The 2012/2013 AAPL bear market has shown that the S&P 500 (SNP: ^GSPC) doesn’t have to move in the same direction as AAPL.

Although AAPL is only 5% away from its all-time high, AAPL lost its dominance. Today AAPL makes up ‘only’ 13.24% of the Nasdaq-100 and only 3.22% of the S&P 500.

That’s because other stocks like Google, Microsoft and Amazon have rallied, while AAPL is trying to recover from its bear market.

Obviously, seasonality is only one factor that affects stocks. Here are five other things to consider about Apple:

3 Reasons Why Apple is a Buy – and 2 Reasons Why Not

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

3 Reasons Why Apple is a Buy — and 2 Reason Why Not

After 18 months in the bear market abyss, Apple is back in vogue again. A rally near the prior pre-split all-time high at 705 has ignited many bullish AAPL calls. Is now a good time to buy Apple (AAPL)?

Apple is within striking distance of its 2012 all-time high (100.72, split adjusted) and iWatch rumors are stoking investors’ imagination.

Is Apple (Nasdaq: AAPL) a buy?

Here are 3 reasons why Apple should move higher and one reason why not.

Time to Buy: Apple is Cheap

Compared to the S&P 500, AAPL is cheap. AAPL is still trading 4% below its September 2012 all-time high.

The S&P 500 is 35% higher today than it was in September 2012 (see S&P 500 / AAPL chart below).

Apple’s P/E (based on forward earnings) is only 13, compared to 15 for the S&P 500.

Time to Buy: Apple’s Got its Mojo Back

After an 18-month, 45% bear market, Apple is catching more positive spotlight (again). Investors and the media are excited about the anticipated release of the iWatch and iPhone 6.

Time to Wait: Overhead Resistance Could Stifle Rally

The all-time high around $100 is an obvious hurdle. Trying to run through a hurdle can be painful. It may make sense to wait until the hurdle is overcome and then use it as a stop-loss level.

Time to Sell: Apple is Hot, too Hot for its own Good

The Apple buy signal is not a hidden secret. Here are just a few headlines from Monday:

• CNBC: “This chart says Apple’s setting up for a huge move higher”
• Nasdaq: “Why investors should own Apple now”
• TheStreet.com: “Why Apple Stock remains a ‘buy’ at the Street”

The last time the media took a bold stand was in May, when it persistently proclaimed a market crash or correction (view a fascinating tale of recent ‘media bloopers’ here).

Time to (almost) Buy: Seasonality

The Profit Radar Report produces hand-crafted seasonality charts for many major indexes. An Apple seasonality chart was made available in 2012, since AAPL accounted for over 20% of the Nasdaq 100 (Nasdaq: QQQ) and over 5% of the S&P 500 (NYSEArca: SPY).

The seasonality chart projected a seasonal high on September 16. AAPL’s all-time high at 705 (pre-split) occurred on September 22.

The seasonality chart also projected a seasonal low in mid-April.

A complimentary look at the full Apple seasonality chart and what’s next for Apple is available here:

AAPL Seasonality Chart

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Apple Deprived Russell 2000 Rejected by Triple Resistance

Thursday was a great day for Apple, an average day for indexes with some exposure to Apple, and a forgettable day for ex-Apple indexes. This raises the question: How strong (or weak) would this week’s market action be without AAPL?

On Thursday the Nasdaq-100 (Nasdaq: QQQ) was up 0.96%, the S&P 500 (NYSEArca: SPY) 0.17%. But the Russell 2000 (NYSEArca: IWM) was down 0.24%.

What’s the common denominator of this fragmented performance?

Apple! AAPL soared 8.20%.

AAPL accounts for 11.78% of the Nasdaq-100, 2.80% of the S&P 500, and zero of the Russell 2000. Thursday was Apple-day. The more Apple, the better.

How would the broader market have fared without Apple’s boost?

One way to find out is to look at the equal weighted Nasdaq-100 ETF (QQEW), which was down 0.01%.

Another way to find out is to look at the Russell 2000, although representing a different market segment (small caps), which is totally Apple free.

The Russell 2000 was rejected by resistance cluster at 1,147, 1,160 and 1,165.

The performance of lesser or non-Apple exposed indexes cautions that the broad market is weaker than it appears.

In fact, the Nasdaq chart shows an immense amount of potentially bearish energy. More details here:

Did the Nasdaq Just Start a Prolonged Head-and Shoulders Decline?

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Why ‘Hot New Tech’ is Getting Crushed by ‘Old Tech’

Until recently, the Nasdaq was driven higher by hot new tech names like Facebook, Priceline and Tesla. Now, ‘hot new tech’ is cooling down while tech dinosaurs are rallying higher. What does this rotation mean?

Priceline, Netflix, Facebook and Tesla are the driving force behind a ‘new and improved’ technology boom.

Those companies are cutting edge, hip, and until recently hot.

But something changed in March. Hip wasn’t hot anymore. PCLN, NFLX, FB and TSLA are all of a sudden 10 – 20% below their highs.

It seems like the money left ‘Hot Tech’ and moved into ‘Old Tech.’

Dinosaurs like Microsoft, Oracle, Cisco and Intel just got a vitamin M shot and boost (M as in Money).

What does this ‘changing of the guards’ mean?

Here’s one possible reason: Stocks in general and the Nasdaq in particular have gotten pricey.

Investors don’t want to go into cash (yet), but they are taking some risk off the table by rotating from high beta tech into ‘tried and true’ low beta tech.

As the third chart illustrates, the Nasdaq (Nasdaq: ^IXIC) has also started to underperform the S&P 500.

The S&P 500 (NYSEArca: SPY) is now top dog and just spiked to a new all-time high this morning. Is this a technical breakout or just another fake out?

Here are two charts that may well change your expectations for the S&P 500:

S&P 500 – Stuck Between Triple Top and Triple Bottom – What’s Next?

Simon Maierhofer is the publisher of the Profit Radar Report. The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.