Despite the selling that we saw today, the market is still intact and doing well. When the Nasdaq was down 30 points, I took a position in QLD to benefit off of any bounce that might occur. I made about 0.6% on the trade, which I am perfectly happy about. One of the things that I have been considering doing for a long time now is fading the market, using ultra index plays particularly if the I am up quite a bit on the day, in order that I may preserve my gains.
It will be interesting to watch Apple tomorrow, because Research in Motion (RIMM) reported after the bell and missed revenue estimates and didn’t provide the greatest guidance in the world. A couple of ways to look at this 1) Industry demand for smart phones are dropping and that is not good for Apple (AAPL), or 2) Apple iPhones are so popular that they are stealing market share from RIMM, thus causing RIMM to miss their estimates. I have a hard time believing that iPhone is running out of market, particularly since they are just now tapping into the China market, so it would make sense to me that the latter option is the most likely the scenario that is being played out here.
As for the S&P, there is no significant technical breakdowns at this point – my observations tells me that the selling is orderly and in control. Fear doesn’t seem to be gripping investors, and seems much more muted then the selling we saw late August and early September.
Here’s the S&P Chart…