Heading Toward The Old High – 07/22/11 © ™

It appears that the Nasdaq Composite is in its third step up since the bottom on July 18.    It’s still unclear whether we will make a significant new high above the May 2nd peak.  But it would not be surprising to hit the area of the old high and consolidate again.  Whether that consolidation turns into something more meaningful will have to wait.  A powerful and sustained surge on high volume through the old high would be a good sign and could not be ignored.

The news in Europe appears to be more relaxed (for the moment) and the US debt talks are due to resolve themselves soon.  Getting the democrats to choke down some of the compromises is going to be a fun job for Obama but that’s what politics is all about, compromise.  An interesting report from the Treasury department that they are conducting seminars (meetings) for the freshmen Congressmen on the true meaning and implications of a government default.

The earnings news has been exceeding the targets and that’s always good but we have to remember that earnings today is “yesterday’s” news.  The market is interested in tomorrow’s news and part of that may be contained in the “guidance” that a company issues with their present earnings’s report.  So make sure you follow a company’s guidance.

07-22-11 NASDAQ COMPOSITE 5 MINUTE BARS

In this next chart of the Nasdaq Composite, notice that we are in an area of prior tops having turned back at the 2880-2890 area several times.  This is the area to watch closely. A significant penetration of this area could be meaningful.

07-21-11 NASDAQ COMPOSITE 60 MINUTE BARS

Apple caught fire from it’s low of 310 on July 20.  It was almost 400 on the day the earnings were released.  Since then it has been consolidating.  This is a good example of “buy the rumor, sell the news”.  Apple apparently has several new products due to be released in September, iPhone 5, iCloud, iPad HD, and ????.  Apple also just released a new operating system (OS X Lion), updated Macbook Air, updated Mac-Mini, etc.  I would watch Apple for another surge upward.  Absence of a renewed surge could be a warning of rough water ahead.  Apple can be an early predictor for the market as it turned weak in February, long before the general market.  Apple is basically a consumer stock and indicates whether the consumer is willing to spend freely.  Apple’s products are not cheap and the consumer must be willing to spend their money on a product that is more expensive than its competitors.

When under pressure, Apple has a history of declining and finding support at a significant prior high.  Looking at the chart, notice that Apple hit the top part of its channel recently.  This could have a minor restraining influence on Apple for the moment.

07-22-11 APPLE DAILY BARS

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