AAPL - Short Opportunity Fizzled

The recent short opportunity for Apple did not materialize as the $242 support held for two consecutive days even though the price was pierced intraday.  That is tremendous strength, and the 2nd day even turned out to be a bullish engulfing candlestick pattern.

AAPL - Short Opportunity

While the market lost 9.46% since the top on 4/26, Apple has managed to lose half at 4.7%, and even made a new high on 6/21.  However, technicals are showing strong sell volume on down days and weak buy volume on up days, an indication that smart money is distributing and the uptrend is likely coming to an end unless earnings on 7/20 will prove to be another blowout.  In addition, negative divergence is showing on both the RSI and MACD.  Given that AAPL is currently the 2nd largest company behind XOM mobile in terms of market cap, both the earnings and outlook must be overwhelmingly positive for the run to continue. 

Three consecutive closes below $242 would result in a 20/50 EMA crossover and signal to short. 

7/9/2010 - Strong rally in downtrend - 20 EMA pierced

I remain bearish on the market despite the near 400 point rally that we've had over the past 2 trading sessions.  The 20 EMA was pierced on both SPX and DJI, but not on NASDAQ.  The downtrend remains intact, and all the major resistance points are consolidated around the 1,090 to 1,110 area, which will prove difficult to break and will present itself as a great short entry if we do end up getting there.  Do not go long until the 50 EMA is pierced on all 3 indexes.