Is Apple strong enough to support NASDAQ?

S&P Elliottwave analysis
April 21, 2014
EURUSD short-term analysis
April 25, 2014

  With earnings results in the centre of attention regarding APPLE, Nasdaq is going to jump start today’s session. Apple was trading above 560$ in the after hours session and also in the pre-market today. The recent important high where we believe the end of the leading diagonal was complete, is the 571$ area. Pre-market trades are done below that level. So bears still have an alternative scenario that could keep them to life. Undoubtedly bulls have the upper hand and breaking above 571$ will be a very good sign for the longer-term trend in APPLE. So APPLE is trading below very important resistance. This upward gap could be wave B for bears but could also be wave 3 for bulls, so it is important to see how it reacts at 571$.

AAPLdaily

So is this gap up in APPLE strong enough to keep NASDAQ supported and back into bullish scenarios? NASDAQ has broken below the Ichimoku cloud support that was holding since the start of 2013. NASDAQ has also made a lower low at 3414 but the decline from its highs at 3738 is not impulsive. The upward bounce has brought the index back near the Ichimoku cloud and with APPLE earnings it pushes back it inside the cloud. It is important for the market not to fade the upward move today, as this could be a sign of rejection at an important pivotal point.

nasdaqD

NASDAQ  is near its 61.8% retracement from the top and near the trend line resistance shown in the chart below. I believe that traders should look to be in the defensive closing longs if not trying a short position at current levels. Short-term support is found at 3500 and this level could also be used as a  trailing stop for bulls to protect their positions.

nasdaq60m

Concluding, APPLE is making a major gap up move that could be the start of  a bigger upward move. Breaking above 571$ is supporting the longer-term bullish case. However NASDAQ gives me some troublesome signs as it is reaching important resistance where a reversal is very possible. I prefer to be defensive at current levels. Risk lovers could also try going short today if support at 3550 fails.

As always, thank you for taking the time to read my new post.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.