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[DrSP]

On this message board, I have already observed at different periods in the last 2 weeks about AAPL's divergence with the market and then outperformance. I got this market message from Tom Kilgore. ________________________________________________________________________________ ________________ -- Apple's recent positive divergence may bode well for the broad market --Recent S&P 500 bottoms were preceded by Apple outperformance --Clearing 50-day SMA could trigger rally for Apple , and perhaps S&P 500 By Tomi Kilgore It may be time for Wall Street investors to start looking to Apple Inc. (AAPL) for leadership again. The technology bellwether's stock was all the rage just a few months ago as it led the broader market to multi-year highs. But once the stock began correcting from its early-April high, investor interest seemed to wane rather quickly. Apple was down 0.3% at $562.55 in afternoon trading Tuesday, down 13% from the all-time high of $644 reached on April 10 . Over the last few weeks, however, the stock has actually been doing rather well relative to the broad market. The S&P 500 Index hit a five-month low of 1266.74 in intraday trading on Monday. That was 11% below its April high, and 2% below previous support at its May 18 low. The S&P 500 was last up 0.5% at 1284. Meanwhile, Apple's low Monday of $548.50 was 5% above its May 18 bottom of $ 522.18 . Apple's stock has diverged in similar fashion at previous market turning points as well. When the S&P 500 slid to a 13-month low in intraday trading on Oct. 4 , Apple's low that day was 14% above the stock's 2011 low hit 3 1/2 months earlier. "It was foreshadowing the strength that would eventually come around to the rest of the market, and I believe it is conveying the same message now," said Tom McClellan , publisher of the McClellan Market Report. In addition, while the index was hitting a 10-month low on July 1, 2010 , Apple stayed above its June low, which in turn was well above its May low. Apple hit its bear-market bottom in mid January 2009 while the S&P 500 didn't bottom out until seven weeks later. Meanwhile, Apple's recent outperformance doesn't mean it is out of the woods just yet. The stock has held below resistance at the 50-day simple moving average--which many see as a short-term trend tracker--since May 3 . But there are some other technical signs suggesting the bottom may have already been seen. For one, the underlying momentum indicator, which tracks the rate of change, has broken out to a two-month high. This suggests that, while the stock price is still below last week's high of $581.50 , it is starting to behave as it does when it is trending higher. In addition, as the stock was hitting a three-month low in mid May, the Relative Strength Index, which compares the magnitude of gains to losses over a specific time period, managed to stay above the "oversold" threshold of 30. While many believe an oversold reading is bullish, as it suggests a short-term bounce is due, the ability to become oversold is actually a sign of longer-term weakness. For example, the RSI stayed above 30 during the relatively shallow declines to the August 2010 and July 2011 lows, but slid below 25 during the January 2008 tumble, and dropped below 20 during the September 2008 crash. Given the stock's positive technical backdrop, rising back above the 50-day SMA, which currently comes in around $585 , might trigger the next up leg to new highs. And that might set the S&P 500 up for a similar recovery.