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If you read any financial news today, it’s very likely you will come across the word “apple.” The company will announce its earnings today after the market closes.

This will be extremely important for the market. Because of the company’s huge market cap, Apple (AAPL) has a big impact on market indices. It’s also the most widely owned stock by hedge funds.

So it’s unlikely the market will continue to rally without Apple. In fact, the recent market correction started after Apple peaked around $700.

The chart below shows Apple is now approaching a key level of support, the 200-day moving average. This line has been acting as support since Apple started its big rally in 2009.

In other words, every time Apple reached that line, investors used the pullback as a buying opportunity. Will this time be different? I guess we could find out today. Apple can have a big move, depending on its earnings.

For the Sake of the Market, the 200-Day Line Better Hold

See larger image

The last time Apple crossed below that moving average was in 2008. I’m sure I don’t have to remind you what happened that year.

That’s why even investors who don’t own Apple should pay attention to what the stock does. If Apple drops below its moving average in a decisive way, it will be a bad sign for the whole market.


Evaldo Albuquerque
Editor, Pure Income

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