The "Bernapple dynamic duo" of this 3-year bull market (Apr 4 post) was back in action today. AAPL played Batman with yet another huge earnings "beat," on extremely strong iPhone sales in China.
"Robin" Bernanke, Holy QE, Batman!!, in his FOMC press conference helped "keep speculation alive that policy makers would embark on another round of monetary stimulus if economic growth slows," according to Bloomberg.
As strong as AAPL's earnings and stock price, up 9% today, were, SPX fell just a little short of pushing above resistance at 1392, closing at its high at 1391, up 1.4%, see charts below, more on this later.
ECB's Draghi, Europe's own Bernanke (see my Dec 22) also chipped in, saying today, presumably to the Bundesbank's Weidmann, Merkel, and other Germans, ""We've had a fiscal compact. What is most present in my mind now is to have a growth compact. I think that's what we have to have." He didn't elaborate," according to Bloomberg.
Also helping a bullish tone was Mark Zandi, the Moody's chief economist who was better on housing than most mainstream experts before the 2007-09 crisis, saying today, "The crash is over….Home sales--both new and existing--and housing starts are now off the bottom."
Stan Humphries, the chief economist at Zillow's, whose housing price index is more current than Case-Shiller, chimed in today with, "While it is unlikely that national home values continue to rise at this rate through the rest of the spring and summer, it is undeniable that we are seeing sparks of life in the housing market."
As I've been writing (e.g. Apr 23), the growth of U.S. employment leading to a strengthening of the single-family housing market is still critical to American middle-class "wealth" creation.
A rising stock market led by AAPL and 1Q earnings "beating" much lowered estimates presumably helps business and consumer confidence, with equity wealth eventually "trickling down," at least that's what Bernanke has been hoping the past three years.
AAPL's China story is not new, back on Dec 6 I wrote: "Because it is now very big, Apple obviously needs very big sources of new growth. In mobile phones, those don't get any bigger than China."
AAPL's stock had fallen nearly -14% from its peak going into earnings, with stories about QCOM, T, and VZ negatively impacting the stock. AAPL analysts knew China was very important, but evidently didn't have good enough visibility on how big the blowout there would be.
Which points out a generic problem investing in a global era. I.e., it is more difficult knowing what is going on over there, the most important case in point at the moment obviously continuing to be Europe.
Which gets me back to the charts, where you can see what's going on globally quickly.
SPX held obvious support at 1357, and stopped just below obvious resistance at 1392, the horizontal green line, just above its 20d ema, the blue dashed line in the middle of the Keltner channel.
Lots of key charts look similar, holding support, now at resistance, those levels lower relative to the 20d ema for weak charts, higher for strong ones.
The issue for markets now clearly is can key charts push through that resistance. That depends on the issues that I tried to lay out in my Apr 23 post, which I won't repeat here.
In the U.S., XLF financials may be most important sector at the moment (the other two sector etfs leading the market in 2012 have been XLK technology and XLY consumer discretionary).
I've written several times that the simple arithmetic and valuations are that SPX can't go significantly above 1400 without financial stocks doing better.
Internationally, EEM emerging markets is still lagging, starting to lose a little relative strength to SPY again, top panel. As in the U.S., selling a lot of iPhones mainly helps AAPL, its happy customers and suppliers.
LEFT CLICK on charts to enlarge.