To predict the market, it is always wise to examine the market leaders because the strength and weakness of the market is generally based on the market leaders. When there is a weakness in the market leaders, it can serve as a warning that
the market may not do well. Also, when the market makes a rally, the market leaders are always involved. Since March 2009 the large cap technology stocks have been leading the markets higher. Will these technology stocks continue its rally, thus driving up the markets?
Apple (AAPL) is one of these market leading company that has performed well past year. It has recover all of its declines in 2008/2009 and was recently trading at a new all-time high. However, I believe AAPL is showing signs of weakness as it declined from its high and after its initial decline, it has been trading laterally possibly consolidating between $190 - $200 range. The area to watch is $185 - $190 range as it appears to be a key level of support since September of 2009.
the market may not do well. Also, when the market makes a rally, the market leaders are always involved. Since March 2009 the large cap technology stocks have been leading the markets higher. Will these technology stocks continue its rally, thus driving up the markets?
Apple (AAPL) is one of these market leading company that has performed well past year. It has recover all of its declines in 2008/2009 and was recently trading at a new all-time high. However, I believe AAPL is showing signs of weakness as it declined from its high and after its initial decline, it has been trading laterally possibly consolidating between $190 - $200 range. The area to watch is $185 - $190 range as it appears to be a key level of support since September of 2009.
Google (GOOG) is another stock many investors consider as a market leader. Like AAPL, GOOG also has erased much of its bear market declines. After declining from its recent high of $625 range, GOOG is currently stabilizing near $525 - $535 level and is definitely vulnerable to further weakness. If GOOG continues to fall, then its next support level is at $500.
Amazon (AMZN) has made a great stride in becoming a market leader. AMZN also made a recent rally and made an all time highs. Unfortunately, AMZN is currently suffering though a correction after making a double top in 2010. It looks like a support level exists around $115 and if this is broken, then it should quickly head down to $95 level.
International Business Machines (IBM) is one stock that investors do not talk about being a market leader, but it made a strong move upward and has been one of the strongest of the large cap stocks. However, IBM is currently suffering through some weakness after breaking the upward support line around $125. Although IBM could rally a bit to reach the resistance line, it should come back down to fill the gap around $110 level.
Despite the near term weakness in all these market leaders, they have not generated panic selling pressure yet. A stock market will have a difficulty to gain positive momentum without the involvement from the market leaders. As we have seen above, these market leaders are currently near their support levels. We must watch these market leaders carefully to find out whether many of them break or bounce from their support level. A break in support level could lead the stock market to a deeper correction while a bound from the support could lead the stock market to a rally and possibly test recent highs.
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