Apple Falls From Tree

 
Apple Computer (NASDAQ:AAPL) continued to reverse course today, dropping 4.15% and taking the tech heavy Nasdaq (NYSEARCA:QQQ) and overall tech sector (NYSEARCA:XLK) with it. The PowerShares QQQ Trust (NYSEARCA:QQQ) declined 1.12%, coming to rest just above its 50 day moving average, while the Sector SPDR Trust SBI Interest (NYSEARCA:XLK) representing the technology sector and companies in computers, technology and semiconductors, dropped -1.05%.
 
Of course, Apple has been on a seemingly unstoppable tear this year, still up  38% after recent losses, however, the stock is now down 9% in the last five trading days. On a technical basis, the stock has convincingly broken its 20 day moving average and has generated a point and figure “sell” signal with a downside price objective of $515, some 11% from current levels.
 
Google joined the party, dropping 3% in yesterday’s trading. while Mattel (MAT) cratered 9% on a poor sales forecast.
 
The S&P 500 (NYSEARCA:SPY) see sawed all day to finish slightly in the red, down just one point, which is amazing considering Apple’s weight in the widely watched index. Apple is expected to be the largest contributor to the S&P 500′s (NYSEARCA:SPY) quarterly growth and the company is scheduled to report earnings on April 24th in what will surely be the most widely watched earnings report of this quarter’s earnings season.
 
Vanguard Information Technology ETF (NYSEARCA:VGT) also reacted to today’s news with a drop of -0.99%.
 
Economic news was mixed with positive news from U.S. retail sales contrasting alongside a much weaker than expected Empire State Manufacturing Report which came in at 6.6, widely missing a forecast of 18 and previous month’s number of 20. The home builder’s index also slumped, registering 25 compared to expectations and last month’s number of 28.
 
The news from Europe was troubling, as well, as bond yields in Spain climbed again, the Euro declined. Spanish bond interest rates on the country’s 10 year notes passed 6% and now approaches the psychologically important 7% level that is widely viewed as “unsustainable.”
 
Bottom line:  Apple computer has an out sized impact on the S&P 500 (NYSEARCA:SPY) and Nasdaq (NYSEARCA:QQQ) Indexes, and should Apple continue its fall from the tree, widely lower prices across all major indexes can be expected.
 
Disclaimer:  Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.