The folks in the business media are exciting about a strong positive reaction to Apple Inc.'s (AAPL) earnings and the Dow Jones Industrial Average moving through the 22,000 level, but the broad market is lethargic and breadth is solidly negative with about 2,500 gainers to 3,600 decliners.
There have been a couple themes lately that the popular media has missed. First is that the strength in the DJIA is not representative of what is going on in the broader market. The vast majority of the gains in the index are due to Boeing Co. (BA) . If you look at the broader market, only about 55% of all stocks are trading over their 40-day simple moving average of price. They are not at all-time highs like the Dow.
The other primary theme is that the reaction to earnings has been poor. While earnings have been quite good overall, the average stock has been down nearly 1% after its report. It is extremely hard to find anything that has been chased following a good report. Indeed, some of the best reports have seen very high volume sell-offs. A good example is Ultra Clean Holdings Inc. (UCTT) , which barely has seen an uptick following a great report and increased guidance.
Small-caps are leading to the downside and the action is starting to feel much like what happened after the strong report from Facebook Inc. (FB) . Even the Nasdaq 100 is losing steam quickly now, although AAPL is still solidly green.
When the market can't rally on good news, there is a good reason to be cautious.