AAPL in focus.

There is an old saying,” with great power comes great responsibility.”  Not many companies ever wield the power that the tech behemoth AAPL.  So with the overall market struggling to find its footing, I guess it’s fitting that the AAPL earnings report could be responsible for reversing or confirming market direction.  Suppliers of this tech giant have raised speculation that orders of chips and displays have declined by as much as 50% begging the question, will AAPL miss earnings estimates?  If the company reports better than expected, expect a gap up Wednesday morning, however, and AAPL miss will likely produce a sizable gap down.

As soon the fireworks over the AAPL report have subsided the market will turn its focus the FOMC announcement at 2:00 PM Eastern time on Wednesday.  With such big hitters coming up to bat I would not be at surprised to see choppy price action today as the market waits holding its breath and hoping for a positive outcome.  Get ready for a wild ride.

On the Calendar

The FOMC begins its 2-day meeting on this first day of May Economic Calendar.  The PMI Manufacturing Index, out at 9:45 AM, expects to come in unchanged at 56.5 in April but continues at multi-year highs.  The biggest number or the day, ISM Mfg Index, come out at 10:00 AM and according to consensus will decline slightly but remains strong in April coming in at 58.6 vs. the 59.3 March reading.  Also at 10:00 AM is the Construction Spending report which forecasters expect to grow by 0.5 percent in March.  A 4-week Bill Action will close out the calendar day at 11:30 AM.

Another big day of earnings reports with just over 260 companies on the calendar.  Stay on your toes and keep checking reporting dates for the companies you hold or those you’re about to purchase because there are more than 800 reports yet to come this week.

Action Plan

An unpleasant day on Monday as the market served up a classic Pump and Dump leaving behind a lot of bearish candle patterns.  The DIA, the SPY, printed Bearish Engulfing patterns that are unfortunately showing a failure at the 50-day SMA.  The QQQ followed through to the downside confirming Friday’s failure of the 50-day SMA.  The IWM joined the party yesterday with a bearish engulfing pattern breaking its 50-day average after working so hard to hold it last week.  Earnings reports by-in-large continue to come in strong, but sadly profit takers continue to overpower buyers reacting to the good results.

Although there are over 260 companies reporting today all eyes seem to focus on just one, AAPL.  The tech giant is weighed heavily in not only the QQQ but also the DIA and SPY.  AAPL reports after the bell today and could reverse or confirm the current market downtrend.  It would be wise to plan for a market gap up or down Wednesday morning.  If that were not enough drama, the market must turn its attention to the FOMC announcement at 2:00 PM Eastern time.  Buckle up this could be a very bumpy ride.

Trade Wisely,

Doug