Major averages were down on higher volume, indicating distribution. While this is another distribution day for the major indices, it does not yet negate the uptrend which began a month ago in late June. Since then the major averages have stepped higher almost every day, spurred on by quantitative easing.
Apple (AAPL) came in with what was perceived as a "positive" earnings report with iPhone sales exceeding expectations. As a result, the stock gapped up about 5% in after hours trade and could serve to push the NASDAQ Composite higher yet again. That said, while AAPL's earnings are a positive for the company, it does not necessarily negate its stiff downtrend. Strong iphone sales does not imply the emergence of a new "killer app" or hardware products in its pipeline and Apple TV has so far failed to prove that it is the "killer app" that the company is looking for . If AAPL is going to turnaround in NFLX fashion, it will have to show a sharp rebound in earnings, but without a "killer app" technology, it is unlikely to have such a sharp rebound.
Yesterday's action saw a lot of leading stocks come off as the market seems to have lost some of its upside momentum with selling spreading away from the big-cap NASDAQ names where it has been centered over prior days. Meanwhile, Caterpillar (CAT) disappointed on earnings this morning as it provides further evidence of a weak global economy. Can AAPL carry the market higher? That remains to be seen.