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Market Needs Apple: Many market participants are shouting loudly that NVDA holds the key to the market whether it is able to hold the key round 400 number in a bearish head and shoulders neckline we spoke about earlier this week. But AAPL is still the largest company on the planet and holds sway. One may say, and I totally agree with this, that Apple has not really displayed much innovation in years, while NVDA certainly has. That being said like NVDA, AAPL is at a key technical level here as on the WEEKLY chart below it is testing the rising 50 WEEK SMA for the first time after a breakout, often a good initial entry in a strategy that was developed by William O'Neill. Volume trends are bearish as the stock has not recorded an accumulation week in 7 months and on its daily chart, it did just crack the 200-day SMA. There are plenty of technical stops placed around that secular line so let's see how it reacts in the coming weeks. If it can keep in the vicinity of the line that would be bullish, but the longer it swims below the less sanguine the message is. 

Taking the Less Sanguine Long-Term Look: Being open-minded in life is an excellent trait to have. In markets, it is a good virtue as well. Here we will take a look at what could go wrong with the Nasdaq. It is a small probability, but for sure one that could occur. Below is the MONTHLY chart of the tech benchmark and as there is still time left in October it is looking at a potential rare three-month losing streak (only one other one since the start of 2016). It is certainly plausible that August was a bearish hanging man candle and it could have started a move back into the 50-MONTH SMA, which has been a springboard and a quick stop as it resumed its steady uptrend. That is what had me concerned about sticking like glue to the line for 9 consecutive months and now looks like it may be limping back toward that moving average. If that line is taken out a likely double-bottom pattern could look to develop that would plunge the tech index below the very round 10000 number where it bottomed between last October and this January. Again this is a very low probability but one must stay open-minded too. Remember crashes, a word I have never used in my 15 years of writing, come from oversold, not overbought conditions. Here we look at the S&P 500 daily charts from the 1987 and 2020 time frames.

"Tortoises can tell you more about the road than hares."  Walking the Tightrope: The S&P 500, the most widely watched benchmark on the planet, looked poised for a solid week until the Thursday and Friday sessions dampened that belief. It is not how you start but how you finish, and the moves to end the week falling .6 and .5% may have looked pedestrian but technically there were some flaws. First, we filled in the upside gap on 10/10 from 9/20, and keep in mind gaps on indexes are somewhat rare. For example, the S&P 500 filled one on 7/6 from the 6/29 session before ramping higher by more than 200 handles (notice how on the bottom of that chart as well the number of stocks above their 50-day SMAs on the index has been in decline mode since late July). If one looks a little closer the intraday reversal on Tuesday produced a bearish shooting star that would have completed a bullish three white soldiers formation, and Wednesday a hanging man candle. The bounce of 4200 was one of the most telegraphed that I can remember, and my feeling is we can touch the 4100 area, measured move lower from the head and shoulders before we attempt the next leg up. 

"Change Begins at the End of Your Comfort Zone."   Change In Character? The Nasdaq rose "just" 1.6% this past week, which is somewhat pedestrian, and seems tame after the big reversal Friday after the employment number. Sure the 10-year backed off just below the 5 number and that helped the "long duration" tech stocks. The tech-heavy benchmark CLOSED more than 300 handles from intraday lows and reacted well after Thursday's doji candle. I was concerned about it lingering near the 13000 number late this week but that issue was cleared up quickly with Friday's behavior. The WEEKLY chart looks constructive and it may be forming that handle on its long cup base after all. The week ending 9/29 did record a spinning top which is a bottoming candle and notice too that there is a good chance that prior resistance at the 13000 on the WEEKLY has now turned into support. Software via the IGV rose 2.7% Friday, its third-best gain of 2023, and it has been pulling the load more than the SMH. The IGV never breached its August lows, which the SMH did do. Of course, AAPL will have a huge say as it is the largest component in most tech-related instruments and it is higher 6 of the last 7 sessions. Volume could be more energetic, but it is common for this to occur at the start of a potential nascent turnaround as nonbelievers tend to play catch-up once the move gains traction.

"There is no way around the hard work. Embrace it." - Roger Federer Monthly Suspense: With everyone on edge over a possible government shutdown this weekend, let us relax and take a look at the MONTHLY technical picture for the most widely followed benchmark. If bullish seasonality kicks in to start Q4, these current back-to-back MONTHLY losses could be considered a cup with handle pattern. In my opinion then the lows of 4200, a bullish ascending triangle breakout on the WEEKLY chart need to hold. Below one can see how rare 3 month losing streaks are, and the last 2 Octobers rose robustly by 8 and 7% respectively in 2022 and 2021. For the less sanguine outlook, if that 4200 level does not hold a move back toward the rising 50 MONTH SMA comes into play, which could be near the very round 4000 number as PRICE catches down. One aspect of the chart below that is concerning is the possible false signal on the MONTHLY bullish MACD crossover that just happened recently. If that were to break back below it looks very similar to the rocky behavior during COVID. That could be the catalyst for a 7% plunge lower.