From the March 01, 2012 issue of Futures Magazine • Subscribe!

Nasdaq-100 following Apple higher

From the end of 2011 to today, the Nasdaq-100 has been steadily increasing, hitting levels close to 2570.

Spencer Patton, chief investment officer at Steel Vine Investments, LLC, attributes the index’s rise to Apple (AAPL) and other high-value stocks, like Priceline (PCLN) and Amazon (AMZN). “We’ve seen Apple basically go semi-parabolic to the upside, where it is going up whether the market is down, whether the market’s up,” Patton says. “No matter what’s happening, it’s moving higher, and so that is pulling the index higher.” He places support and resistance at approximately 2400 and 2600, respectively. However, he cautions against buying as he expects a reversal soon. “Anytime stocks go parabolic like that it’s generally a sign that it may be towards the end of at least the recent advancement. As soon as Apple has some type of reversal day to the downside, you could very well see the Nasdaq take a pretty sharp couple days lower,” he says.

Similarly, Shawn Hackett, president of Springer Financial Advisors, believes a bearish trend is due. However, Hackett attributes the market’s recent rise to “the relief rallies stemming from the fact that the ECB provided unlimited funding to the banking system and temporarily took the collapse of that system off the table. It brought all the investors back into buying the stocks on a short-term basis. That’s the primary driver for why the stocks have been taking off here.” Looking at the VIX, Hackett says he expects a “nasty period” soon. “Whether it’s a resumption of the bear market that we had last year or if it’s just a correction in an ongoing up market, that remains to be seen,” he says. “But nonetheless, I still think it’s a correction that most investors would want to avoid.”

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