Did the Ghost of Burroughs Play William Tell?

AAPL a Day

Without a doubt the tremor that shook the market today was the action of AAPL which after a parabolic run to the upside looks to have put in a climax top with the highest volume since earnings in January '11. Given the weight of AAPL in many indexes it comes as no surprise they should buckle and cling to AAPL like a magnet and feel the pull of its gravity. The significance of it's move is evident in the only index showing any signs of an upside move over the past two weeks has been the NDX. Also evident is that the laggard declining into today has clearly been the Russell while the others have been fairly flat.

Index %Gain from 02/03

Taking the SP, the sideways move becomes clearer when looking at the move the past 9 days.

SP 500

Additional support is the lack of new 52-Week highs since February 03 which coincided with the sideways move in the index.

$USHL5 02/15/12

Taking all this information into context today really should not have come as a surprise. It is still jolting however because until today it was the anticipation of the event and now it is the reality of the event which results in differing psychological paradigms. The action of expectation and the reaction to event is often suffixed with: “It wasn't so bad after all.” Now that this has happened will the response be muted or will there be aftershocks?

During the past 9 sessions there has been a lack of significant selling –today inclusive. Even under the duress of AAPL selling off there were only a handful of stocks that showed 4% declines on $100M dollar volume. Distribution takes time and given the persistent bid over the past 6 weeks and the relatively light selling of the past two weeks the signs are not there. Tomorrow's action will give further clues but thus far it looks like a sideways pullback has been occurring and the potential for a deeper correction is on the horizon and probable, but further evidence is needed.

As I like to cajole myself at times, “I might be stupid, but I ain't dumb.” It's clear that there is increased risk in the market from my perspective as a swing trader. As a smaller player in the scheme of things it's easy for me to get out of the market with a few mouse clicks, and sometimes easier then that. Ultimately it's my money management that takes precedence above my opinions and the simplest way to remain reality based is to see how many stops got hit today and how much profit decayed. Nothing else really matters.