The Three Pillars

Although there are 10 main Industry groups and 239 sub industry groups, I consider the 3 most important to the viability of any move up to be Technology, Energy and Financials.

Common sense would tell you that any bounce attempt in the market would be led by AAPL because of its weighting. The NASDAQ subscription that details their proprietary weighting schedule will cost you $10k a year, but from what the NASDAQ has released from past weighting and from what a few smart statisticians have figured out, AAPL's weight before the NASDAQ's last rebalancing of the NASDAQ 100 (QQQ) was around 20%. To put that number in to perspective, if you took the bottom 50 weighted NASDAQ 100 stocks and added AAPL and called it the NASDAQ 51, the bottom 50 stocks could see a decline of 2% and if AAPL was up 3% on the day, the NASDAQ 51 would close green, up +1% even though 50 of 51 stocks declined 2% each. That's how much weight AAPL carries and why I have considered it the ultimate market bellwether.

I have also said recently (and this is pure gut feeling) that I believe that AAPL will dislocate from the market to the downside, meaning, say we get this bounce that it looks like we will see, I believe before the market cracks so bad that it is unrecoverable, AAPL will underperform and may in fact be down in an otherwise up market.

There seem to be some 3C charts that are starting to back up this gut feeling I've had. I also mentioned that Dan Loeb's fund (many funds follow Loeb's holdings as most fund managers would rather follow the herd and have a return that is in line with the average then try to go out and outperform the pack-why?  Because they make in some cases over a billion dollars a year to manage a fund), Dan had APL as a top 5 holding, recently that has changed. What Loeb did with his AAPL position is a mystery, maybe he cut it back so it is no longer top 5, maybe he got rid of it altogether.

Looking at the 3 pillars and AAPL, this may be the spot where AAPL does what I have suspected it will do-severely underperform the broad market.

Take a look at AAPL today

 The 1 min divergence here is not as strong as others we have seen.

 The 2 min divergence is almost negligible. If certainly wouldn't make a case for an AAPL led bounce based on this chart.

 The 5 min is actually leading negative where we have seen 5 min positives.

 Here's Energy's 1 min chart

 Energy 2 min looks a lot better then AAPL

 The 5 min is nearly the mirror opposite of AAPL.

 Financials 1 min, Financials almost look as if they will lead, thus even though  there's a nice +18% gain in BIDU May Puts, I'll leave them in place.

 Financials 2 min look good.

 As do the 5 min. It's very hard to imagine these don't bounce.

 Tech on the other hand, doesn't look so hot on even the 1 min

 The 2 min is almost as bad as AAPL

The 5 min is again, nearly not worth mentioning.

If you recall the market update, you may recall the QQQ's looked the worst, the most inconsistent. At this point, I'm hoping AAPL can move up to the $640 area, but I'm having doubts-that's where I'd like to get some May or maybe even June puts.

As for some quick market observations, today is the first day in a while the market has held its losses from early in the day. This is a change in character.

Remember I mentioned a "V" reversal is pretty uncommon. Here's what the SPY looks like intraday.

Price is nearly "U" shaped, volume is and that' what we should see.

EOD closing SPY charts...

 SPY 2 min, although positive divergences can be there to halt a decline rather then bounce the market (like a consolidation), the size and timeframes suggest otherwise.

 5 min

 The divergence even reached the 10 min. This makes some sense with the Financial exposure the S&P has.

The DIA looks second best, the Q's by far look the worst.

Perhaps we get some overnight news or just ES action that moves the market higher or gaps it tomorrow. Thus far in AH, the SPY is close to breaking out of the range.

The light blue hash marks next to the price scale are the current bid/ask.

I'll keep an eye on currencies and ES for any substantial changes. I do find one thing curious, remember yesterday how quickly the market retreated around 3 p.m. and I said words to the effect of, "something really seems to have spooked the market"?  I have no idea what to make of that, but I find it interesting.