Nearing a $1 trillion in market cap, AAPL hit some major turbulence overnight.  Amid reports that the company has trimmed its orders, the stock gapped lower and is clinging to support.The larger chart shows that the stock has also reached the top of a long-term channel and a major Fib extension level at 190.43.   It pushed through the Fib on Jun 4 (the day Warren Buffett very publicly pounded the table on the stock), and is doing its best to hold on.Needless to say, this hasn’t helped the broader markets.  ES was off as much as 20 points overnight, but has since climbed back to an 8-pt loss.  Is it time for another pause, or will AAPL bounce back and save the day?

The market’s bigger headwind remains oil and gas prices — which should be ready for another big leg down.  But, if the last few sessions are any indication, VIX stands ready to reassure the algos.  It has a nice, new shiny paper-tiger trend line to break below.

continued for members…

The weekly chart shows AAPL’s precarious situation in better detail.  While AAPL and SPX have been hand in glove for years, Sep 2013 – Apr 2013 saw some pretty substantial divergence.There was only slight divergence, however, in 2015.  AAPL topped out on Apr 28 while SPX topped out on May 21.  And, when AAPL’s rising white channel broke down and was backtested on Aug 10, that was the last great opportunity to short SPX for the first leg down of that correction.

Aug 24 was the big downdraft for AAPL (and FB, NFLX, GOOGL, AMZN.)  Had AAPL not bounce sharply off its lows, SPX probably would have backtested 1823 that day (yellow arrow.)  Clearly, AAPL’s downturn continued to bother SPX for most of the next year.  So, it’s doubtful that SPX could shake off a downturn at this point.  BTW, note that AAPL’s 2.24 extension is based on the 2015-2016 drop, while SPX’s is based on the 2007-2009 drop.

Bottom line, fresh off another $100 billion injection into the buyback machine and making new highs by spurting above a potentially important Fib, AAPL seems likely to hold these levels.  Stops down around 180 ought to be adequate as AAPL contemplates its IH&S target up at 226.

Now, around the horn…nothing much new on the equity front.  Still in limbo, with oil and gas a drag, USDJPY a drag, and VIX in position to prop stocks up.  This would be an excellent day for ES and SPX to backtest the last little channel broken out of.The Dow (remember, it made a lower low in April) is approaching its .618, so it should  legitimately care.

Despite their bounces yesterday, RB and CL still have further to go.  CL’s SMA200 is getting pretty close.While RB’s is much further away on a percentage basis.I’d keep a very close eye on RB, which is clinging to a TL of support from Wednesday.Prices at the pump have barely budged.  Something much more dramatic is clearly needed — and, preferably in the next few days, before May CPI is announced and the FOMC meeting on Jun 12-13 (press conference on 13th.)  GasBuddy and AAA report and average price of around 2.93.  But wide swaths of the country are paying over $3 gallon.USDJPY has officially reversed off its SMA200, but that could change on a moment’s notice.UPDATE:  3:50 PM

The usual Friday afternoon BS, with VIX providing most of the support, RB and CL “recovering” from their earlier dips. SPX is as close to the previous high as possible… …and AAPL “luckily” back above the 2.24.  I believe we’ll get the follow through on CL and RB on Monday, looking drops across the board — unless USDJPY takes off.Will be back with some closing thoughts in a little while.