Rotten Apple

Now our bell was ringing
Our souls were singing
Do you remember every cloudy day, yow
--Jackson 5

As Apple (AAPL) stock zoomed over the past year, its mega cap status gives it outsized influence on the performance of market indexes. We've been keeping an eye on AAPL, positing that weakness in this name should take the tape with it.

That's been wrong as rain so far.

AAPL has been for sale for the past few months, punctuated by a -12% move today after disappointing earnings that drove it below important support at 500. The stock seems destined to fill the gap created a year ago at 425. The stock is down almost 40% from its late September kiss of $700.

Meanwhile the overall tape has been stronger than a mule's breath. Today, the SPX touched 1500--a mark last occupied in late 2007.

Is AAPL irrelevant or is the tape destined to play ketchup? It shouldn't take long to find out. The Dow has been up 10 out of the last 11 days, measures of sentiment are stretching to the bullish side, and the recent euphoric moves into SPX 1500 seemingly qualifies Tom DeMark's preferred scenario for upside trend exhaustion.

Stated differently, many classic ingredients are in place for a tape reversal.

position in SPX