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An Apple a Day...... Keeps the bears away? It is not a popular stance these days, which is why it should be taken note of. Sure seasonality is bearish this time of year traditionally until the end of Q3, and I am in the cautious camp myself but as market participants we need to be open to all possible scenarios. AAPL is a massive company, still the largest name on the planet even after hitting a speed bump recently. As it swam near the very round 200 number in late July it was a front cover story as it was the first publicly traded name to hit a $3 trillion dollar market cap, and we know those types of magazine headlines often see a stock make a top. But as technicians we focus solely on PRICE and Apple has made a stand right where it needed to. On the chart below notice how the 175 area was firm resistance between late 2021 and mid-2022, and now can be support. That 7% WEEKLY loss in the first week of August is certainly an eyesore, but the 175 area until it is broken to the downside should be viewed as constructive. Its daily chart broke below a bear flag but has now reversed higher and we know from FALSE moves come fast ones in the opposite direction.

Dollar Dilemma: The greenback has been on an impressive run, with now a 5-week winning streak in place. Its previous runs in 2023 of 4 weeks in February and a 3-week streak in May quickly fizzled. Is that pattern going to play out once again? On its daily chart, it is running into resistance at its downward-sloping 200-day SMA. To its credit over the last one month, it has dropped just 6 sessions, and its RSI traveled from the oversold 30 to the overbought 70 in rapid fashion, which often sees further future PRICE runs. Looking at the chart below demonstrates an Intermarket relationship that has not acted as it traditionally would. Oil did blink somewhat last week, but with the group overall via the XLE, the best-acting major S&P sector over the last one and three-month periods, I think that will stabilize and resume its uptrend. The dollar on the other hand looks exhausted, although it seems like everyone is looking for a pullback there. It is no coincidence that the S&P 500 has started rolling over starting in August with both of these headwinds in place. Look for more of the same until Q4 gets underway and equities get their mojo back. 

"Industrial" Strength: Of course, we know the Dow Jones Industrial Average is a shadow of itself for decades of old (just 5 industrial names left in the benchmark), and it is saying something that I am looking at this instrument to open this WEEK AHEAD Note. I would rather be discussing the Nasdaq or small caps, but it is where strength is emanating from and our focus is making money (from the long side here). AAPL we know has been soft, but remember this is a PRICE-weighted index so its effect will be negligible. On the other hand UNH at over 500 will have the largest impact and that stock is bull flagging, like the chart below of the Dow itself, just above the very round 500 number and a move above 515 carries a measured move to 580. Last week the Dow rose .6% displaying good relative strength as the Nasdaq fell 1.9%, the Russell 2000 by 1.6%, and the S&P 500 dropped .3%. This is certainly a sign that investors are becoming risk averse. And this has carried on over the last month as the Nasdaq, Russell, and S&P 500 UNCH with the Dow rising 3%.

"Follow the stream. Have faith in its course." Sheng Yen Shot Across The Bow? The possible canary in the coal mine for the S&P 500 chart below was very likely the ugly outside day on 7/27 that reversed after briefly trading above the round 4600 number. The following three sessions all recorded very tight ranges inside the 7/27 candle which was an indication of fatigue (the 7/31 and 8/1 days registered spinning top candles which also suggest exhaustion). On the chart below the 21-day EMA is now sloping lower and it has CLOSED below it on back-to-back sessions something it has not done since breaking above the swing traders toolbox 21-day EMA (notice how as the index attempted to shrug off February weakness that line acted as resistance. On the WEEKLY timeframe, the chart still has a bullish slant as a handle may be developing on a long cup base even though it fell more than 2% last week, its largest WEEKLY loss in 5 months. On the MONTHLY chart, this will most likely look like a small blip come year-end as we are in the midst of a powerful 5 MONTH winning streak.

Whistling Past The Graveyard: Last week we mentioned how the WEEKLY gravestone candle on AAPL which occurred right at the very round 200 number (round number theory) was something to be wary of before its earnings reaction. The last time that occurred almost exactly one year ago the week ending 8/19/22 started a 50-handle downtrend after a powerful 6-week win streak between the weeks ending 7/8-8/12. That also provided the pivot in a WEEKLY double bottom base and with this week's ugly action falling 7%, a retest of that area near 175 is certainly plausible. Now remember this will not have such a large impact on the Dow as it is a PRICE-weighted index and there are 11 of the 30 names that are trading above the 184 area where it trades, but it is still easily the largest holding in the Nasdaq 100, after the "special" rebalancing. It is the biggest component in the S&P 500 so this name carries a ton of influence, and with the tech sector already showing some signs of fatigue, this could be the trigger that starts a potential sell-off.