Apple Should Get a Bounce

 | Jan 16, 2013 | 6:59 AM EST
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For all the complacency we see in the intermediate-term indicators we had one small move to the downside on Tuesday and the put/call ratio shot up as if we were down 2% on the day. It closed the day at 103%.

But if we step away from that minute-to-minute type stuff we see that the higher put/call ratio actually moves the moving averages higher and those are what we use to determine where sentiment is on an intermediate-term basis.

If we look at the chart of the 10-day moving average of the put/call ratio, we see a potential higher low yet again in this indicator. It's possible it will not turn up and, instead, will break to a lower low. But since it is a 10-day moving average and, with the exception of Tuesday, we haven't had a put/call ratio over 100% in 10 trading days, I think it is likely that we see it begin to rise from here. That's the intermediate-term complacency.

We have already discussed the 30-day moving average of the equity put/call ratio several times, so suffice to say that continues to hover at the lows and continues to attempt to turn upward, although the turn upward is not evident on the chart yet.

There is something else that is rather curious in the indicators. The McClellan Summation Index continues to rise, although it is still at a lower high.  But this indicator is based on the breadth of the market, or the advance/decline line.  The breadth has been positive for eight of the last 10 trading days, yet the cushion for the Summation Index continues to decline, not improve.

For example, one week ago it would have taken a serious decline with the net differential of the advancers minus decliners at -3000 or more to get the indicator to roll over. As of today it will take only -1300. A week ago it would have taken at least two quite hard down days to falter and now one will do it.  That is the waning momentum, which goes hand in hand with the current overbought situation.

I suppose it is bullish that the market has no selling and that it has refused to correct at all this week, but markets like this tend to add to the complacency.

One place where there was no complacency was Apple (AAPL). Beloved Apple has become rotten to the core. Analyst after analyst has now either downgraded it or taken his or her numbers down. This is a far cry from the pie-in-the-sky $1000 targets we saw just a few short months ago when it was peaking at $700. Now it seems like targets with 4-handles abound.

Apple has some support coming up from a trendline and it has been hit hard along with the sentiment shift. so it should have some sort of bounce. Who knows? Maybe that will just add to the complacency in the market if it can get a green Apple instead of a red one.

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