After three big gains in a row it isn't too surprising that a gap-up open despite a poor response to earnings from Apple (AAPL) is being sold. The bulls had a boost at the open on news that President Trump was preparing a plan to resolve some of the issues with China on trade but this is obviously very early and very tentative so early excitement may not be warranted.
To add additional pressure, the October jobs news was stronger than anticipated. That is increasing the likelihood of Fed interest rate hikes and has caused bonds to selloff. The 20+ Year Treasury Bond Fund (TLT) is now under recent lows and at its lowest levels since 2014. Bonds helped to cause the corrective action in October and it is not a good sign to see them at lows again.
The market's biggest problem right now is that it already had such a sizable bounce. There is interest in more individual stock picking but not when many stocks have already had huge bounces in the last couple days. They will need to consolidate before we can be more aggressive with individual names again.
One of the most worrisome signs of problems is that Apple is not bouncing very well. Few stocks have as many loyal fans but they are not being rewarded for buying weakness this morning. There is little support on that chart right now and a close at the lower end of the range is likely to trigger more selling. If you like Apple as a longer term investment give it more time to find some support. There is no need to rush and buy the dip at this point. Personally I believe there are stocks that will perform better over the next few months.
At this point the name of the game is protecting capital again. If you had some good gains over the last few days, don't let them slip away. Keep stops in place, wait for stock picking to work better again and be opportunistic.
Recent buy NII Holdings (NIHD) received good news in Brazil about an increase in the spectrum cap that will help them sell their Nextel subsidiary. I'm still with the stock for now.
(Apple is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.)
