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Bulls Blocked, AAPL Falls Late, Trend Continues

When a stock or index are trending and moving through a well defined channel, there are going to be days that make you happy, and days that make you scratch your head. Those moments of uncertainty can make our jobs as traders extremely frustrating. That uncertainty and frothiness is our achilles heel; head fakes, gap-ups, dips into the fire, popping back out, it can make your head spin and question your resolve.

Sure, the market was up yesterday, and that's a good thing, right? Well, yes and no. It's definitely better to have an up day over a down one, but when the Bulls have every opportunity to bring it, and they fail, that up day can seem fruitless and frustrating. In this case, the failure was to break through critical resistance (S&P that is 1113) for a third time in as many weeks. Some are calling that behavior a Triple Top, a pattern that signals a bearish reversal.

So, while it's a good thing the markets saved themselves from losing critical support in the 50 day exponential moving average, it's definitely not a good thing failing to break through resistance for the third time. So, is it a Triple Top? I don't think so, Triple Tops that result in market reversals are usually formed over months, not days. So, if this is a Triple Top, the reversal will have that kind of scale, that is the reversal won't be very big if at all.

What's Up With AAPL
Our favorite stock looked pretty good over most of the session, although a little disappointing that it wasn't keeping pace with the indexes or other leaders in the tech sector through the day and after a healthy Gap-Up. But right at the end of the session, the bottom fell out of AAPL leaving many scratching their heads. I got tons of email asking what happened, the Apple discussion groups around the web were in a buzz. What caused AAPL to drop almost 2% in just a few minutes.

Well it turns out that a news item hit the street. It reported that Apple was considering adding a second US mobile carrier in 2010, and it wasn't Verizon, but the black sheep of carriers, T-Mobile. Investors got spooked over this prospect, with the AT&T exclusivity deal nearing expiration, and with the thinking that Apple margins would take a hit with such a deal. Here's a pull quote from AppleInsider:

While rumors of a possible Verizon-compatible iPhone in 2010 persist, one analyst (Doug Reid of Thomas Weisel Partners ) has predicted that Apple will instead bring the iPhone to another GSM-based carrier in the U.S.: T-Mobile.

In a research not, Reid said; "AT&T has likely realized this, he said, and has changed its advertising focus accordingly to be less focused on the iPhone." Man these investors are a nervous bunch. Isn't it a good thing that Apple is expanding its reach to new customers, even if it is with a sub-standard carrier? I would think this would put even more pressure on Verizon to consider partnering with Apple.

Disclosure: Long AAPL