Apple (AAPL) is the largest market cap stock in the market. It has more impact on the major indices than any other stock. Apple is also a key leader. Its prospects impact a slew of other stocks but, most importantly, it has an outsized impact on sentiment.
Apple is a core holding of many portfolios and many holders don't ever plan to sell it. They are convinced that the valuation is reasonable and over the longer term it will continue to grow and prosper.
They may be right but in the short-term it looks very poor and the potential for more downside is quite high. It is taking out a key technical level today at the 200-day moving average. A close below $165 suggests there is more downside to come.
One of the big problems is that is very little support on the chart below the current levels. The bulls are confident that when it reports earnings on May 1 it will come back to life. They believe the recent concerns are grossly overblown.
Technically the Apple chart is very poor, and it is helping to drag down the rest of the market. Until it looks better the indices are going to struggle as well.
We have no choice but to watch Apple if we are looking for a market turn. Until this chart improves and it regains some key support the overall market is going to struggle as well.