Market Milestones: Bobbing for AAPL

A heat map dripping with the blood of tech felt fitting for Halloween day. Microsoft led the tech sell-off, gapping below both the 100DSMA and 200DSMA as well as a minor trendline, and ultimately closed down 6%. I’ve been cautious on Microsoft ever since it broke through its massive bullish trendline back in July and it has continued to fail under that level. This bearish gap down continues the trend of lower highs and lower lows, and it looks like Microsoft is headed toward $388.00.

If it reaches the key support at $388.00 and begins to break below, it will be on the precipice of a massive head-and-shoulders pattern. However, the setup looks a bit too obvious to play out exactly as expected. Counterintuitively, a break of that key support and a drop into the $385.00–$375.00 level could offer a decent buying opportunity for a short-term trade back to the long-term daily moving averages. Microsoft remains a powerhouse in AI and should continue to be a leader in that space for years to come.

MSFT

However, the market seems less than thrilled with the idea of paying a P/E of 34 for Apple’s current growth rate and AAPL is gapping down below the 100DSMA and out of the rising wedge in the post market. The broader market itself feels stretched, looking a little drowsy, fatigued, and, quite frankly, exhausted after running nearly nonstop uphill for the past two years.

With the two biggest components of the market, MSFT and AAPL, trending lower, it’s hard to envision the bulls staging a strong end to the week. As I warned last week, SPY, QQQ, RSP, and DIA have all broken down from their rising wedge patterns, and they’re heading lower with momentum. Typically, when a rising wedge breaks, it quickly retraces the majority of the wedge pattern.

AAPL

If SPY gaps below the critical support at $565.00, it would signal that a more significant retracement is likely underway. Given the near shaved-bottom candles on all the markets, I expect a retest on Friday before any potential continuation downward.

SPY

QQQ