The music stopped in Apple and by the time the big traders found chairs it had shaved 4% off the price. Everything being linked (the footbone connected to the ankle bone, the ankle bone connected to the leg bone…), the market paid the price. Rumor had it that traders were poised to sell into news generated this week by Apple’s big event. They may have been spooked by Samsung announcements. Frankly we see the whole thing as passing silliness caused by managers’ grasping for performance. And as far as that goes there is no technical reason to be selling Apple. Both the horizontal line and the sloped trendline should act as support.
But the sell off happened at a crucial point — at the crest of a strong 14 day wave as prices recovered from the last downwave. Thursday further complicated the picture with a strange day. The candlestick illustrates the day when you are reminded that prices surged up, hit a barrier after a new high and then plunged 11 points (SPX) on no noticeable news. We take this day as indicative that contrarians (who have suffered lately) awoke joyously and jumped on the bandwagon.
For the moment the wave that started August 7 is fluttering in the wind. And we are going to treat it as noise. (Loud noise, but noise.)