AAPL price action off June lows provides some clues
- SPX stall out near 3902 makes this an important spot, while 3720 is key on downside.
- WTI Crude looks to be nearing initial low to its recent decline; yet bounces are sellable.
- AAPL’s rally off the June lows makes this attractive to buy dips into late July.
The near-term view for Equities continues to show a range-bound, choppy consolidation, as part of an existing downtrend. Both bulls and bears alike typically get frustrated with these kinds of patterns, and they aren’t typically all that easy to forecast. Bottom line, despite the mild improvement in both momentum and breadth in recent weeks, there hasn’t been the necessary “upward thrust” in breadth to argue a larger rally is imminent. While there hasn’t been the sufficient capitulation just yet to argue for an “All-clear”, there has been some drying up in selling and far fewer stocks trading at 52-week lows. Overall, a move back over 3902 will be important towards thinking a larger bounce to 4000 or 4040-65 can happen. Conversely, any decline back under 3723 argues for a pullback to challenge new lows sooner than later.
Close-up view of last month’s choppy range for SPX provides clues
The chart below highlights this choppy consolidation that SPX has been trading within for the last month. As can be seen, the areas at both highs and lows have held on retests in recent weeks, making these areas very important technically for understanding whether trends are improving or deteriorating.
The important areas to watch are 3902-3918 for SPX cash, while 3720 is important as support. Given that prices just held 3902.44 on Monday, this has slightly more importance on the upside (shown by green arrow below). Movement up above 3902 cannot be ruled out, as this bounce from last week looks to have occurred in a very impulsive five-wave advance. Thus, getting back above would allow for the subsequent rally (from Monday 7/18’s lows) to take a similar form in both price and time to the initial bounce from last week.
Overall, one should hold off on getting too aggressive in selling movement above 3902 as this likely could run up another 100-150 SPX points. Conversely, movement back down under 3720 is necessary before weighing in that an immediate pullback to test/breach June lows takes place. When this happens, it should move down further to break 3636.
Until either side is broken, it won’t pay to make bold calls about what “should” happen; rather it’s just important to concentrate on signs of this consolidation giving way and “following” the breakout, no matter which direction it takes.
WTI Crude oil looks close to bottoming in the short run
In the last 24 hours, WTI Crude has shown some impressive near-term stabilization which argues it might be forming a near-term bottom. Similar to Treasury yields, Crude peaked out within a couple days of June’s SPX lows. When studying hourly price action for any clues, we see that prices look to have carved out five waves lower on intra-day charts.
If this count is valid, then three points are worth making:
First, an oversold bounce in WTI Crude finally could be starting after a tough month of weakness. Upside targets lie at $107 initially but might carry up to $112.
Second, following a bounce into late July, it’s very likely that prices will then retest July lows and undercut these prior lows near $91. This would set up for a decline to the mid-to-high $80’s which likely is buyable.
Third, it remains very difficult to say with any confidence that the highs are in for the year in WTI Crude. Crude’s new bull market was born two years ago in 2020, and I suspect that even on a decline to the mid-$80’s, this should be buyable.
(Weekly charts (not shown) show the intermediate-term uptrend to intersect also in the mid-$80’s, adding to conviction that this might be an attractive place to buy dips).
Overall, I suspect that volatility in the energy sector will continue, and as to whether one attempts to play a short-term rally, or holds out for better intermediate-term lows to buy all depends on one’s risk tolerance and timeframe for investment.
AAPL’s bounce from June lows provides some clues
Given AAPL-0.36% ’s huge percentage weighting within SPX as well as QQQ0.05% , this remains one of the most important charts to keep a close eye on to gain more clues as to the Equity market’s near-term direction. A couple relevant points:
-While most investors are debating whether FOMC hikes 75bp or 100bps in late July, AAPL-0.36% has quietly advanced over 17% off June lows. This looks important and positive.
-Wave structure shows this bounce to be carving out the first meaningful five-wave advance since the breakdown happened a few months ago (Not yet complete).
-If this truly is making five waves higher from June, than the June lows should hold on any retest into late July, making any late July weakness buyable, as an attractive risk/reward.
-Intermediate-term trend channels will need to be recouped to have real conviction of a move back to new all-time highs (I expect that AAPL-0.36% likely does make new all-time highs this year).
This level lies near $165 and will be encouraging for AAPL-0.36% Bulls when this is recaptured.
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