Option Investor
Market Updates

Oversold Bounce, but AAPL spikes lower.

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The stock market had become short-term oversold and stocks are seeing a bounce. Investors and crude oil (-2%) are ignoring the ongoing hostilities between Israel and Hamas in the Gaza Strip. Today's move in the market looks like a little last minute window-dressing by funds and some short-covering by investors before the year ends.

The Dow Jones Industrial Average (DJIA) is up about 109 to 8594 and challenging technical resistance at its 50-dma. The NASDAQ Composite is up 25 points at 1535 and nearing possible resistance at 1550. The S&P 500 index is up almost 12 points at 881 and trying to hold on to a bullish breakout over short-term resistance at the 880 level. The small caps, via the Russell 2000 index, is up 7.25 but lagging the major indices by failing to produce a new relative high with today's rally.

Some of the best performers today are technology stocks. The DDX disk drive index is up 3.8%. The SOX semiconductor index is surging 3.3% and trying very hard to breakout over technical resistance at the 50-dma. Additional standouts today are the broker-dealers with the XBD index up 2.3%, the IUX insurance index up 2.3%, the HMO healthcare index up 2.3% but the most bullish sector I can find is the DFI defense index, which is up 2.5% and nearing a new six-week high.

One stock making headlines this afternoon is Apple Inc. (AAPL). Shares of AAPL had been trading higher around $88.00 then suddenly the stock plunged south of $85.00 in a matter of minutes. Investors reacted sharply to comments on an Internet blog that the reason AAPL had pulled out of the upcoming MacWorld Expo was due to Steve Jobs' failing health. True or not this would be an easy rumor to produce. Wall Street was worried about Jobs' health several months ago. AAPL is not commenting on Jobs' health and only repeating their official statement that they are no longer interested in participating at the MacWorld event. Shares of AAPL are bouncing from their lows with the stock off 83 cents to $85.80. The $84.50-85.00 zone has been support for AAPL the last few days. So far it's holding.

Intraday Chart of AAPL:

Checking out the OptionInvestor plays today I see that ENR, a call play, is out performing the market. Shares of ENR are up 4.4% and hitting new two-month highs at $52.40. LMT is also out performing with a 3.8% gain and a new six-week high near $84.00. SUN, the oil refiner, is bouncing from its 200-dma again as expected.


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