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Apple’s Record Breaking Results and Forex Worries

Apple posted record breaking results yesterday after US markets closed. The company sold 74.4 million iPhones and 21.4 million iPads in the last quarter. The earnings per share ($3.06 vs. $2.60) were even better than the most optimistic expectations from Wall Street analysts. This lifted the stock by 5% in the aftermarket trading. The rise might have been even higher, but for the worries of investors, who are reported to have started having concerns about the impact of strong dollar in future earnings.

Since my last analysis, the financial sector rallied a bit from the rising trend line but then fell back again from resistance. Utilities and healthcare stocks are overbought when compared to the rest of the market, while technology stocks fell back down to the support after rallying since my last report. The energy sector broke out of the wedge formation and the industrials look to me as if they’d be ready to move higher.

All this gives slightly mixed signals. As the dividend paying healthcare, utilities and consumer staples are still very much overbought in relation to the S&P500 index (both in one and three month periods), it suggests that market participants are still safety oriented and hesitant about the future trend. No wonder the market has been in a sideways mode. At the same time the small caps (Russell 2000 index) have been stronger than the S&P over the last week, which means that some of the risk appetite is coming back into the market.


S&P 500

In the weekly picture the index is still inside the uptrending regression channel but has moved sideways since I suggested this in November last year. This also the same period of time that the safe have sectors (Utilities, Health Care and Consumer Staples) have been sucking money from other riskier sectors. We now have another higher weekly low from last week, which is technically an encouraging sign and a support level relatively close at 2014.50. This is also a new potential pivot low in the daily time frame.

ES 240

S&P 500, 240 min

The four hour picture reveals a sideways move with lower highs below the 2060 target area. This target was hit after my latest analysis and the market has since formed a lower high suggesting that we could see another move lower to the 2026.50 and 2014.50 support area. Should the correction be deeper the next support level is at 1997.50.


I am still positive on this market eventually moving higher but first we might see some volatility or sideways move accompanied a test (or tests) of the support area between 2026.50 and 2014.50. I would be interested in long entries inside this support range and should we get the signals to go long, then the target levels I am looking at are: Target 1 at 2062 and Target 2 at 2088.

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Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.

Janne Muta
Chief Market Analyst

Wednesday, 28 Jan, 2015 / 8:58

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