Post AAPL Earnings – What’s Next for the Nasdaq?

It’s been a remarkable couple of weeks for the Nasdaq, not just in terms of performance, also in terms of ‘market oddities.’

On Friday, the Nasdaq QQQ ETF literally jumped higher, propelled by Google’s 13% gain.

However, Google’s massive rally covered up internal Nasdaq weakness. On that day more Nasdaq-100 components were actually down than up.

New highs on negative breadth is a rare feat. Nevertheless, the Nasdaq managed to do the same thing again on Monday.

The Nasdaq Composite is made up of about 3,000 stocks (compared to 100 for the Nasdaq-100). On Monday, there were 940 more stocks down than up.

Here’s another breadth measure, illustrated visually via the chart below. The upper bars represent the PowerShares QQQ ETF, the lower graph the number of Nasdaq Composite stocks at new 52-week highs.

The number of stocks at new highs fell from 189 on Friday to 97 on Tuesday, a 49% drop.

My most recent Profit Radar Report highlighted lagging breadth and bearish divergences and warned of a pullback.

Regarding AAPL earnings, the Profit Radar Report said Sunday that: “AAPL is butting against minor resistance and AAPL seasonality shows some weakness in the middle of July. AAPL’s move is likely to be more subdued than GOOG.”

AAPL (Nasdaq: AAPL) dropped as much as 7% in post-earnings after market trading and gapped below support this morning. Click here for detailed AAPL analysis.

What’s next for the Nasdaq?

The bottom line, based on a number of indicators, is this: The potential for a nasty Nasdaq selloff exists, but another rally leg to new highs seems more likely. The green lines (around 111 and 106) should provide support for the QQQ. If they don’t, watch out.

A more detailed analysis for the S&P 500 is available here: S&P 500 Analysis

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.

If you enjoy quality, hand-crafted research, >> Sign up for the FREE iSPYETF Newsletter

Four Tech Giants Fight the Secret Battle of Web Domination

Talk about high stakes. Four young technology giants are fighting for the most important and valuable commodity in the world. The bigger your slice of this commodity, the closer you get to ultimate web domination.

This man has a dream. A big dream. His dream is to make a ‘vital’ resource available to everyone in the world.

His mission website – internet.org – makes his dream seem philanthropic. His dream is to help farmers, students, patients, everyone on the planet. To help them share knowledge.

His dream is internet access for everyone. The man with the dream is Facebook founder Mark Zuckerberg.

The true intention behind his dream is stated on internet.org’s home page: “Making internet access available to the two thirds of the world not yet connected.”

Facebook (Nasdaq: FB) wants to increase its subscriber base and inch closer towards web domination.

Facebook knows that only 1 billion of the earth’s 7 billion people currently have mobile phones, but 80% of the rest of the population lives within areas covered by 2G or 3G mobile web access.

Every tech company knows that data means power.

Facebook purchased WhatsApp for $19 billion not because of its 55 employees, but because of its 450 million (older or aging) users.

Facebook just celebrated its 10-year anniversary and may feel too old, too old for the future. According to Zuckerberg, WhatsApp will make Facebook more attractive for younger users.

WhatsApp is the biggest acquisition since AOL and Time-Warner in 2001. To put this into perspective, Facebook paid $345 million per WhatsApp employees and $42 per WhatsApp user.

That’s a lot of money, but to add one more perspective, Facebook shareholders currently pay $141 per registered Facebook user.

Facebook sent a clear message: It wants to dominate the internet, but it is not alone.

Google’s Race for Web Domination

Google’s Android is the world’s most popular smart-phone/table OS. Google wants to extend the reach of Android into other areas, like home, auto and healthcare as the acquisitions of Nest and Boston Dynamics (producer of military robots).

No other tech company is as diversified as Google (Nasdaq: GOOG).

Apple’s Race for Web Domination

Apple (Nasdaq: AAPL) used to be known for devices like the Mac and iPad. It briefly dominated the digital market with apps, but that’s no longer enough for web domination.

Apple is looking for the next big hit. Possibly in cooperation with Tesla?

Amazon’s Race for Web Domination

Amazon started in 1995 as an online bookstore. Today Amazon (Nasdaq: AMZN) is a specialist for everything bought and sold digitally.

Like its competitors, Amazon wants to tie users to its platform. Kindle, its own brand of cell phone and packages delivered via drones. Amazon’s founder Jeff Bezos is a visionary without borders.

Facebook, Google, Apple and Amazon make up 27% of the Nasdaq 100 and Nasdaq 100 ETF (Nasdaq: QQQ), so their successes and failures certainly stand to impact the investing masses.

What About Internet for Everybody?

Pre-internet customs such as having dinner with family, talking (actually speaking) to the person standing next to you, and being able to enjoy your favorite pastime without getting interrupted by your boss weren’t such a bad thing either.

But, according to Zuckerberg, “the problem is that those people, who have never accessed the web, don’t know why it might be useful to them.”

Yes, the internet is useful, but it’s not a life-changing force for the better as internet.org would want you to believe.

How will the battle for web-domination effect the stock market in general?

Here is a full 2014 forecast for the S&P 500 NYSEArca: (SPY): S&P 500 2014 Full-year Forecast

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, GOOG, AMZN and MSFT – Tech Sector Giants Turn Laggards

It’s said that a fractured market is an unhealthy market. The reverse is true and based on the recent string of index highs the market appears healthy. However, some former tech giant leaders are starting to wane. What does this mean?

The S&P 500 and Dow Jones eeked out a new all-time high this morning, the S&P MidCap 400 recorded a new all-time high last Thursday. The Russell 2000 came within 0.08% of a new all-time high. The Nasdaq Composite recorded a new recovery high on Thursday while the Nasdaq-100 remains below last years recovery high.

On the surface the string of new highs/recovery highs is bullish and shows that the major indexes are firing on all cylinders. A humming engine is less likely to stall. However, there are some early issues that may soon illuminate the “check (stock market) engine light”.

While broad indexes remain strong (with the exception of the Nasdaq-100), individual stocks are showing signs of fatigue. In fact, prior tech giant leaders are turning into laggards.

Google (GOOG)

The February 12 article “Will Google Continue to Climb?” highlighted the dashed green support line and support at 760 and stated that the rally will continue as long as prices remain above 760 or dashed green trend line support.

Google broke below support in mid-March and now trades nearly 5% below its all-time high. The 50-day SMA is at 788 and should offer some support.

Apple (AAPL)

We all know about AAPL’s historic ascent and decline, but last week it appeared as if AAPL could stage a small comeback. The log chart shows a brief break out above the down hill parallel channel followed by a bearish relapse. A close below the 20-day SMA at 442 could unlock much lower prices (a shockingly low possible target was just revealed in last night’s Profit Radar Report).

Amazon (AMZN)

Amazon’s chart doesn’t offer any particular insight from a technical analysis perspective, but we take note that AMZN is more than 6% below its all-time high already.

Microsoft (MSFT)

Microsoft has been stuck in a 13-year trading range. MSFT just hit a year-to-date high, but is well below its 2012 high, which incidentally occurred in April.

Summary

It’s said that a fractured market is an unhealthy market. Aside from the lagging Nasdaq (primarily caused by Apple), there are no obvious fractures on the broad market index level.

The waning leadership within the large cap sector though is an early warning sign. The S&P 500 is not far away from key resistance (price target) and key support. A move to hit resistance or below support will be a sell (as in go short) signal.

Last night’s Profit Radar Report featured a specific rally target and the must hold support.

Technical Analysis – Will Google Continue To Climb?

Google is trading at an all-time high but momentum is vanishing and RSI is showing two bearish divergences. This alone isn’t a sell signal, but a break below support should be.

A stock that’s trading at all-time highs has little overhead resistance and an unobstructed view to even higher prices targets.

After a truly nasty 18% selloff in October/November 2012, Google soared to new all-time highs. What’s next from here?

Like any other momentum move, Google’s momentum run will eventually take a breather. A number of indicators suggest that any upcoming correction may be more on the shallow side.

But there’s no law that says you need to suffer through corrections hoping that it remains fleeting and short-lived.

The chart below shows a dashed green trend line. A break below would be a first warning sign. A close below the horizontal support line at 760 would open the door to further losses.

Our last Google update (Will Google’s Fumble Take Down the Entire Technology Sector) was posted on October 19 (dashed vertical gray line) and said:

GOOG trading volume was through the roof as prices tumbled below the 20 and 50-day SMA and a couple of trend lines. Prices generally stabilize somewhat after large sell offs like this before falling a bit further. A new low parallel to a bullish price/RSI divergence would be a near-term positive for Google.”

The down side risk for Google and the entire tech sector was limited as the article pointed out that: “Next support for GOOG is around 660 and 630. The Nasdaq Indexes and the Technology Select Sector SPDR (XLK) has been much weaker than the Dow Jones and S&P 500 as of late. There were no bearish divergences at the recent S&P and Dow highs. This lack of indicators pinpointing a major top limits the down side of the tech sector.”

The lower green lines represent support at 660 and 630. Following a period of stabilization in late October, Google fell as low as 636 against a bullish RSI divergence and has been rallying ever since.

There’s no solid evidence that Google’s run is over, but RSI at the bottom of the chart is showing signs of fatigue and bearish divergences on multiple timeframes.

Bearish divergences can go on for a while and in itself are no reason to sell, but the bearish divergences combined with a close below 760 would point towards more weakness and could be used as a signal to go short for aggressive investors.

Don’t miss future analysis on market heavy weights like Google, Apple & IBM. Sign up for iSPYETF’s FREE e-Newsletter.

Will a ‘Bad Apple’ Spoil the Rest of the Market?

AAPL is down 35% while the Nasdaq is moving higher and the S&P 500 is trading at new recovery highs. Is this bullish for the broad market or will ‘a bad Apple spoil the whole bunch?’

An apple a day keeps the doctor away or so the saying goes. Up until recently Apple (as in AAPL) also kept any bear market away.

For much of 2009 – 2012 the stock market followed this simple formula:

rising AAPL = rising stocks.

Theoretically falling AAPL should = falling stocks, but that hasn’t been the case. Why? And is that bullish or bearish for the broad market going forward?

AAPL – From Leader to Laggard

The chart below shows the percentage gains of AAPL and the Nasdaq Composite since 2012.

Until mid-November AAPL and the Nasdaq traded directionally in sync. Rising AAPL = Rising Nasdaq and vice versa. That changed by late November, when Apple started heading south and the Nasdaq north.

How can this be? Other companies started to pick up the slack and fill the void Apple left behind. Google for example started to rally in November. So did Microsoft, Oracle, Amazon, Cisco, Qualcomm, and others.

The second chart illustrates GOOG’s recent counter-AAPL performance. As shares of other technology sector stocks rallied, their market cap and weighting in the Nasdaq increased.

As AAPL tumbled, its weighting (and importance) in the Nasdaq and S&P 500 decreased. Not only did Apple shares tumble 35%, its weighting in the Nasdaq did the same. It fell from over 20% to 13%.

At its best, AAPL accounted for nearly 5% of the SPDR S&P 500 ETF (SPY) compared to 3.62% today.

Apple’s relevance to the overall U.S. market diminished as Apple shares spiraled lower.

Technical Apple Analysis

The chart below is an updated version of the log chart I first introduced in an August 24 video analysis about Apple.

My comment at the time when AAPL traded at 675 was: “I would like to see a more deliberate test of the upper channel line, but being out of AAPL seems like a prudent move.”

A later issue of the Profit Radar Report recommended to go short with any push above 700.

Getting back to the log chart of Apple; the black parallel trend channel provided a target for the high as well as an initial target for the first leg down. After back testing the lower parallel channel line once more (kiss good bye), AAPL embarked on the next leg down.

On Friday, AAPL closed below support, now red resistance. RSI has not yet reached a new low to confirm the price low. This could be the setup for a bullish divergence, but I would wait for more confirmation in the form of a close back above the red line.

Use that trend line as basis for your stop-loss, because I am following a new parallel channel and a break below this channel support could trigger a bearish technical break down pattern with a significantly lower price target.

Interesting Apple developments and possible profit opportunities will be covered by the Profit Radar Report.

Will Google’s Fumble Take Down the Entire Technology Sector?

Due to a combination of facts, Google shares dropped as much as 11% on Thursday before trading in GOOG was halted by the Nasdaq. What caused this meltdown and will it carry over and drag down the Nasdaq and technology sector?

Google couldn’t wait to share its disappointing Q3 earnings with Wall Street. Although slated for an after-hours earnings report, Google accidentally spilled the beans around 12:30 EST.

At first it looked like a refreshing change to Washington’s modus operandi of extend and pretend or snore and ignore. But as it turns out, R.R. Donnelley (the company that does Google’s financial filings) accidentally filed Google’s 8-K form too early.

Heading for the Exits

Surprise turned into disappointment and distain as investors dumped GOOG as fast as they could. At one point GOOG was down $83.43 or 11%. Nasdaq even suspended trading in GOOG. Why the rush for the exits?

Analysts surveyed by Thomson Reuters expected earnings of $10.65 a share and net revenue of $11.86 billion.

The actual profit was only $9.03 a share on revenue of $11.33 billion. Another  major concern was that the average price that advertisers paid Google per click fell 15% from a year earlier. If Google, the king of monetizing advertising dollars, can’t charge top dollars anymore, how will Facebook and others?

What’s Next for Google?

Google is the third largest component of the Nasdaq-100 Index (corresponding ETF: PowerShares QQQ) after Apple and Microsoft. What does Google’s sell off mean for the Nasdaq QQQ and the technology sector (corresponding ETF: Technology Select Sector SPDRXLK)?

GOOG trading volume was through the roof as prices tumbled below the 20 and 50-day SMA and a couple of trend lines. Prices generally stabilize somewhat after large sell offs like this before falling a bit further. A new low parallel to a bullish price/RSI divergence would be a near-term positive for Google. Next support for GOOG is around 660 and 630.

Will Google Drag Down the Technology Sector?

The Nasdaq Indexes and the Technology Select Sector SPDR (XLK) has been much weaker than the Dow Jones and S&P 500 as of late. There were no bearish divergences at the recent S&P and Dow highs. This lack of indicators pinpointing a major top limits the down side of the tech sector.

Key support for the Technology Select Sector SPDR (XLK) is at 29.50. A move below 29.50 would be technically bearish although there may not be much more down side. Traders may use 20.50 as trigger point for bullish and bearish trades.

Simon Maierhofer shares his market analysis and points out high probability, low risk buy/sell recommendations via the Profit Radar Report. Click here for a free trial to Simon’s Profit Radar Report.