Apple Rumors, Greece Halt Rally: Dave's Daily

Greek issues continued to surface plaguing investor confidence and regurgitating these issues here is futile since I don't have anything to add to current knowledge. Suffice it to say, the problem will haunt markets for a long time given contagion fears as they may apply to Italy for example--a much bigger economy.

Rumors swirled that the NASDAQ was about to lower the weighting of Apple (AAPL) shares currently at 20% of the index ($NDX) related to the QQQs. The exchange didn't comment when asked but this weighting existed for a long period prior it being reduced just last year I believe. This caused a sharp $30 reversal in Apple's price. Generally, technicians dub this an "outside day" when the stock opens much higher and then reverses closing near the day's low. This is bearish technically. It shouldn't surprise anyone if this rumor was planted by shorts.

Empire State MFG Survey beat (19.53 vs 14.75 expected and previous 13.48); Industrial Production misses (.0% vs .7% expected and previous revised higher to 1%); and, Housing Market Index (29 vs expected 26 and previous 25). FOMC Minutes revealed a divided Fed about more easing but this was already known it seems.

Deere (DE) posted earnings of 1.30 vs $1.24 expected; Devon Energy (DVN) reported an earnings report that beat expectations ($1.55 vs $1.46 expected); Abercrombie & Fitch (ANF) reported earnings that missed ($1.03 vs $1.13 expected) but shares rose 10% as the company is going to open stores in Europe (can they sell more clothes there than in the U.S.?); Dean Foods (DF) reported earnings that included positive comments about its dairy business; Comcast (CMCSK) rose 5% on the back of strong earnings. Kellogg & Co. (K) will pay $2.7 billion in cash for Pringles which just goes to show gimmicks can work.

News from the eurozone was mixed. China stated it would buy more euro-denominated debt which boosted Asian and European shares. Bank of England's Merwyn King stated they had more stimulus tools (money printing) to boost the economy if necessary. As U.S. stocks began a march higher at the open only to run into some selling after news that euro finance ministers may delay next Greek bailout. According to a report in USA Today the eurozone has one foot in recession. Elsewhere globally early reports had Iran cutting off oil supplies to Europe but the country later denied it was doing this. Nevertheless oil prices climbed. Nevertheless, all this chatter weighed on investors' psyche.

Leading stock sectors lower were industrial stocks like United Technologies (UTX) and Caterpillar (CAT) all heavy weights in XLI (SPDR Industrial Sector ETF).

Stocks fell sharply more because they're overbought and volume has been light making markets more accident prone as we've been suggesting. Typically volume picks up on sell days as stops get hit and Wednesday was no exception. Breadth per the WSJ was negative reversing "some" overbought conditions.

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