NEW YORK (Real Money) -- It is remarkable how closely the history of the apple tree is connected with that of man. --Henry David ThoreauThe market has been under pressure for about three weeks and the big question today is whether the Apple's ( AAPL) earnings report tonight can help to turn the tide. AAPL is unquestionably the most important stock in the market and when it struggles, it casts a very long shadow. Without leadership from AAPL, it is going to be tough for the market to escape its recent funk. Technically, there is no question that we are struggling with the possibility of a more severe downtrend. Monday's action cemented the second failed bounce of the indices since the second quarter started, and the downside support is precarious at best. It isn't any big mystery why the sellers have been more active. Earnings season has been a very mixed bag so far, with a number of disappointing reports, Europe is struggling with sovereign debt issues again and recent economic reports in the U.S. have missed the mark. There are good excuses for selling, and given how we ran straight up in the first quarter, it won't take much to provoke some profit taking. The bulls hope that a solid report from AAPL tonight will help to end the recent jitters that have been plaguing the stock for a couple of weeks, but the report from AT&T ( T) is causing renewed pressure on concerns that iPhone activations may be disappointing. AAPL sold off last week on similar concerns after Verizon ( VZ) reported, and now T seems to be confirming that there may be an issue. Outside of AAPL, we have a lot of choppy and churning action. There is no real upside leadership, although a few stocks like eBay ( EBAY) and Microsoft ( MSFT) did bounce on their reports but have not gained further traction. Financials, energy, technology and just about all the major sectors have turned downward. Biotechnology and retail have probably held up the best, but they are staying quite narrow. How you deal with market conditions like this is largely a matter of style. Some like to bottom fish. They want to buy weakness in hopes of catching a low point. That works best if you average in slowly and leave room for error.
I tend to be a trend follower, which means that when the market is trending I expect it to continue to trend in the same direction. Typically, markets will go further in one direction or the other than most people think is reasonable so I'd rather stick with the direction and only change course when there is good reason to do so. Right now, the trend is down and appears to be building. That doesn't mean there won't be some bounces and countertrend moves, but as a trend follower I have to give the bears the benefit of the doubt until there is proof to the contrary. One of the hardest things about downtrends is that there is always a chorus of traditional Wall Street folks urging you to hurry up and buy. They will tell you that if you aren't loaded up long, you will miss out when the inevitable rally hits. The truth is that you usually have plenty of time to buy when the market action improves and, in fact, if you move slowly you won't have to make up the losses that the early bottom fishers usually suffer. The market is struggling and if we recognize and appreciate it we will be better off than if we fight it. AAPL is going to set the tone today and, unfortunately, after the T report, it isn't too upbeat right now.