charts show the major indexes hitting resistance at the top end of broad uptrend channels and on declining upside momentum
, which I'll get to after a further note on Apple and the Nasdaq.
A FURTHER NOTE ON APPLE'S ROLE IN THE MARKET:
My most recent Trader's Corner (4/28/15) pointed out that Apple stock (AAPL), which is in the PRICE-weighted Dow Average was not going to pull up the Industrials any more than any other 100+ dollar Dow 30 (INDU) stock. And, the lagging chart pattern seen in INDU suggested that the related S&P 500 (SPX) might not do more than hit the same top as seen previously in SPX. This situation would then tend to keep the overall Market locked in a trading range more or less; more so in the S&P, a bit less so with the Nasdaq as it expanded its prior range on the upside slightly.
A added note is that the foregoing (Trader's Corner) article link details the lag in the Dow based on an analysis of ALL the longer-term charts of the 30 Dow stocks. More of the 30 have bearish patterns than bullish ones. Check it out if you didn't already.
The lagging Dow chart pattern is unlike the situation with the Nasdaq Composite (COMP) and the big cap Nas 100 (NDX) which made new highs fueled in significant part by Apple which accounts for a sizable chunk of COMP and NDX which are of course capitalization-weighted.
Has Apple 'become' the Market, or at least Nasdaq!? AAPL represents nearly 10% of the Nasdaq Composite index COMP, thanks to its $750 billion value. Moreover, Apple accounts for about 15% of the big cap Nas 100 Index. And of course, Apple rises as a share of these tech benchmarks as AAPL increases in price.
My Chinese-American MD, just back from Hong Kong, finds that among the middle class in China, the iPhone and other Apple products have much appeal. He said to me: "imagine if only 1/5 of Chinese people bought Apple products?" I can imagine it! But I digress.
APRIL MONTH-END TECHNICAL REVIEW:
S&P 500 (SPX) MONTHLY CHARTS:
The S&P has the 'problem' so to speak for the bulls of a Market that has been going up so long that SPX almost has to pause or correct at some point. The Index is hitting resistance implied by the top end of its broad uptrend channel. This can go on a LONG time of course but when upside momentum as measured by the 13-month slows or 'rolls over' as highlighted below, this is usually an early warning that the Index is at least going to go sideways for awhile as it 'throws off' its prior overbought condition.
SPX MONTHLY CHART IN RECENT MONTHS:
Investors 'tire' of a trading range market that goes on for months, even within a long-term bull move and stop buying.
Options traders should love a PREDICABLE trading range as there's much that can be done in terms of selling options at the two ends of the range and generally in strategies that pay off when an Index stays within certain price parameters.
DOW 30 (INDU) MONTHLY CHART AS OF END-APRIL:
The Dow 30 (INDU), as highlighted on the monthly Dow chart, is again hitting resistance implied by the top end of its uptrend price channel. As INDU trends sideways to higher, it is doing so on 'declining' relative strength. This bearish price/RSI divergence and the fact that INDU has been in an 'overbought' condition for an extended period, suggests increasing potential for the Dow to dip toward the mid to low end of its uptrend channel such as occurred on the prior dip to 16000.
THE NASDAQ COMPOSITE (COMP) MONTHLY CHART:
The Nasdaq Composite is hitting two-fold resistance so to speak. Both as COMP has neared its prior all-time price peak AND by the Composite hitting the top end of its uptrend channel. COMP has gone to continued higher highs into March-April but on falling 'relative strength' as suggested by downtrend seen in the 13-month Relative Strength Index (RSI) indicator.
A divergent (price/RSI) pattern doesn't mean an end to the primary bull market, especially in the tech-heavy Nasdaq, but could make for a sideways trend and whippy price action if not a sizable pullback. It seems more likely that prices might drift for a while than have a sharp downdraft.
THE NASDAQ 100 (NDX) MONTHLY CHART:
There's not much more to say about the monthly Nas 100 pattern that's much different than discussed above with the broad Composite. Stay tuned!
GOOD TRADING SUCCESS!