"Impressive:" That's the word that comes to mind when I think about how the market barely flinched as beloved Apple (AAPL) lost more than 10% Thursday. What was unimpressive, however, was that the S&P 500 keeled over after it climbed above 1500.
We started the month with folks fretting over the debt-ceiling debate. When was the last time you heard anything about that? Yes, I know: They took care of that in a vote the other day -- but what about sequestration? Remember how sick and tired you were of the fiscal-cliff terminology? I'll bet by the end of February you'll be sick of the word "sequestration." The deadline for those spending cuts is now March; how likely do you think it is that the two sides will agree peacefully on the details?
I don't imagine that we will wake up one day and this will suddenly be on the market's mind. Rather, I expect that it will slowly creep into the discussion on markets. Then it will become all anyone talks about. CNBC will probably start a clock with a countdown to March 1. Then they will start interviewing any Congressperson who wants to get on television and speak on the subject -- and, of course, folks on Twitter will start using the hashtag #sequestration.
Away from that, market statistics didn't change much from Thursday's action. Breadth was good but not superb. The number of stocks making new highs expanded beyond Wednesday's poor reading, but not more than what they had been doing. The put-call ratio remained subdued, showing more complacency but no giddiness. The banks, meanwhile, went sideways with the market, so there was neither outperformance nor underperformance.
In the meantime, I was asked about the copper chart. You may have noticed that this price has gone sideways lately. I do find it curious that the Chinese market has rebounded so substantially, and that U.S. housing is in recovery, and yet copper isn't budging. Silly me to think things actually move on economics these days.
In any case, copper is in a triangle formation. That's a pattern of indecision -- exactly what's conveyed by these higher lows and lower highs. While we would respect a break in either direction, the action lately doesn't seem to have the "oomph" to produce either kind of move right now.
There is one thing to watch, though: This recent copper rally hasn't carried it to the top line around $3.75 per pound. So if it falls before it can tag that upper line, it will most likely break $3.60 the next time down.
Here is where timing is important. For triangles to be effective, the eventual breakout should come somewhere between halfway and three-quarters of the way into the apex. Copper is currently at the three-quarters mark, by my estimation. So if it fails to break out of this trading range in the next few weeks, that'll likely mean the persistence of the range -- but a break in the next week should hold. Again, if it's to the downside, it'll mean a break of the $3.60 level.