We finished near the highs but it definitely was not a pretty day. We had substantial point losses, ugly breadth and very little bounce action. Apple (AAPL) struggled again and all those dip-buyers who couldn't wait to jump in a month or two ago were sitting on their hands doing little.
The big question is whether AAPL's earnings report tomorrow night can change the mood of the market, which has turned sour recently. Negative AAPL sentiment affects the market in numerous ways, and it is hard to imagine any sustained upside without AAPL participating.
From a purely technical standpoint, we are in a precarious position and there is no reason to believe that we have made a lasting low. The S&P 500 and the Russell 2000 did manage to hold above the early April lows, but the Nasdaq breached it with vigor and now has little support down to the 2900 level.
We are in a downtrend, but market action like this always seems to attract folks who just can't wait to buy. They can't resist trying to buy the bottom tick and will ignore the momentum and other negative technical indicators to do so. For some people, being all in at the moment of the bottom tick is the ultimate in trading, but for most people that game is a major money loser.
All you really need to know is that the market is under pressure and there is no reason to believe that the selling is going to suddenly end. We might bounce, and maybe AAPL will help improve the mood, but we have dangerous conditions and caution is required.
Have a good evening. I'll see you tomorrow.
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