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Choppy Stock Trading Looks to Follow the Whims of Crude Oil, Apple

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August 4, 2015

U.S. stocks look set for a choppy trading day, likely taking cues once again from the volatile crude oil market. Crude prices bounced slightly Tuesday after suffering a nearly 4% slide to start the week. Apple (AAPL) continues to hold sway on the broader stock market, too. The iPhone maker’s shares are chewing up the charts (more on it below).

Commodities traders were sniffing around crude oil valuations after prices plunged in the previous session. Crude prices have been weighed down by a continuing worldwide supply glut, especially with Iran likely to come back on line, and uncertainty over economic growth following China's streak of disappointing data. U.S.-traded West Texas Intermediate fell to five-month lows on Monday, while Europe’s Brent finished below $50 a barrel. Both contracts are up nearly 2% early Tuesday. 

SPX-Below-2100

FIGURE 1: CLOSE BELOW 2100.

The S&P 500 (SPX) rebounded from early weakness on Monday but still closed the session shy of the closely watched 2100 line. Data source: Standard & Poor’s. Chart source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Apple’s Technical Move. Apple (AAPL) tipped lower again in early action Tuesday, on track for a fifth closing loss in a row and 10th in the last 11 sessions. AAPL shed 2.4% Monday and is now 10.9% below the February 23 record close of $133. That means the stock entered official correction territory for the first time since mid-January. The stock also closed below its 200-day moving average, which many view as a dividing line between longer-term uptrends and downtrends. The last time AAPL closed below the 200-day moving average was September 17, 2013.

Disney Due Post-Close. Can the operator of the Happiest Place on Earth leave investors smiling? Disney (DIS) will issue its fiscal Q3 earnings report after the bell this afternoon. Wall Street expects the company to report per-share earnings of $1.41. That would be a 10% increase over a year earlier. Streak alert: Disney has beaten EPS expectations in each of the last 10 quarters. Disney is expected to post revenues of $13.17 billion, up 6% from $12.46 billion a year ago. Investors will also be listening for any updates on “Star Wars: The Force Awakens” as many continue to wonder how DIS will handle the beloved franchise.

Auto Sales Smash Expectations. Cheaper gasoline appears to have revived car buyer appetites. U.S auto sales blew past expectations in July, the nation’s automakers said on Monday, helped by continued demand for trucks and SUVs. The big three — Fiat Chrysler, Ford Motor (F) and General Motors (GM) — all reported sales figures well ahead of analyst expectations and marked their best July since before the recession. Ford’s utility vehicles— a category that includes both SUVs and crossovers—had a strong July, rising 13%.

Good trading,
JJ
@TDAJJKinahan

JJ Kinahan

JJ began his career in 1985 as a Chicago Board Options Exchange...

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