Market Anxiety Hits Transports, Russell 2000, Nasdaq

Darrell Gulin | Stone | Getty Images

Apple as a non-confirmation? It started in the middle of February: Transports failed to keep advancing with the Industrials. At the time, the failure was blamed on higher fuel prices; indeed, oil prices hit a 10-month high as we closed out that month.

That was the first non-confirmation that got bears going.

Then, as we moved into a new quarter in April, it was noted that the small-cap Russell 2000 began underperforming the S&P 500. It is a modest underperformance (down 4.7 percent for the month vs. the down 2.9 percent S&P underperformance) but it too has been seized upon by bears as a sign that U.S. growth — even with modest expectations of 2.5 percent GDP growth — may be moderating.

Now, the Nasdaq — which has dramatically outperformed the S&P 500 all year (up 14.5 percent vs. 8.7 percent), is underperforming — but only for today. Volume on the Nasdaq is slightly higher than normal.

It's not just Apple , plenty of other companies like Seagate, Broadcomm and even Netflix have turned in stellar performances this year.

I know everyone is worried about AAPL down 5 days in a row, but this is the first day the Nasdaq has significantly underperformed.

It's a sign of the power of AAPL that even a one-day drop has traders wondering.

This is tricky. Apple, by traditional valuation metrics, is not overpriced. But the investor concentration in the name, along with a 50 percent runup in a little more than three months, has got many nervous.

And the bears have noted for weeks that estimates — and price targets — for AAPL have continued to climb.

Glass half empty? Economic data very mixed this morning: positive retail sales, but the Street is concentrating on the lower than expected housing and Empire Manufacturing figures.

The National Association of Home Builders Sentiment Index got an unusual amount of commentary this week, largely because of this comment from Chief Economist David Crowe: "Interest expressed by buyers in the past few months has yet to translate into expected sales activity."

Not all negative news: Reliance Steel this morning increased its Q1 guidance to $1.50, well above prior guidance of $1.22-$1.40 and above consensus of $1.29. CEO David Hanna attributed the higher guidance to better pricing and "somewhat stronger" demand. RS is primarily a U.S.-based producer; their core business operates service centers that distribute metal products all over the U.S.

Bookmark CNBC Data Pages:


Want updates whenever a Trader Talk blog is filed? Follow me on Twitter:

Questions? Comments?