There’s a whole bunch of reasons to believe the S&P 500 index has not bottomed yet, says Chris Verrone. He’s the head of technical and macro research at Strategas.
Apple stock doesn’t suggest a bottom
One such indication, he proposed, is Apple Inc (NASDAQ: AAPL) that still isn’t down enough to suggest the investors have thrown in a towel. This afternoon on CNBC’s “Power Lunch”, Verrone said:
These declines or capitulate lows are often characterized by the best stock of the cycle falling last and hurting people. That’s been Apple Inc this entire cycle. And I just don’t think we’re done there.
Other signs of a bottom that haven’t appeared so far include a big increase in put/call ratios, swelling volume, and the VIX comfortably above 40%, he added.
Apple Inc is well above its major support
According to Verrone, Apple down more than 25% year-to-date does not indicate the market has bottomed because the stock is still well above its major support. AAPL trades at a PE multiple of 21.38.
Major support we have called Apple is at par, Apple Inc at $100. That is the long-term 200-week moving average on Apple. That’s been support many times over the course of this ten-to-twelve-year cycle.
Earlier this week, the U.S. Federal Reserve raised interest rates by three-quarters of a point to fight decades-high inflation. Consequently, the benchmark index slipped into the bear market territory.
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