Apple’s (AAPL) Textbook Bounce Saves the Market

To those who “don’t believe in the technicals” we suggest they take a look at yesterday’s Apple (AAPL) chart. Like a superstar baseball player who consistently hits 75 home runs per year and is considered to have a “bad year” with 65 home runs,  yesterday’s introduction of the new iPhone appeared to disappoint the tech set and they sold it down hard.   The stock is a darling of the fast money crowd and largest position of many of the well known hedge funds.

The bulls were waiting to pounce at the 200-day moving average, however, and were able to rally the stock $18 into the close.  The classic technical bounce rescued the S&P5oo from its afternoon swoon and failed rally.  The shorts were forced to cover generating a nutcracking 40 point S&P rally in the last 45 minutes of trading.

News from Europe the cause of the bounce?  Possibly, but we don’t think so.  In fact, we saw what a bank bailout by a national government did to the sovereign credit of Ireland.   The Europeans  really need to get the banking capitalization right or this mess is going to drag on and drag us down for a long time.    The core Euro countries have to be careful as they move to recap their banks and insure it does not cause their sovereign credit rating to deteriorate.

So there you have it, folks.    The key metrics on the downside are now S&P500 1075 and Apple’s 200-day moving average.  All else is noise, in our book.

That’s our take.

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