At Least We Still Have Apple (AAPL)

Stocks reversed a strong move higher yesterday. And while we haven't been looking for a convincing rally to kick off until we get some clarity on 2Q corporate earnings and outlooks for the rest of the year, yesterday's reversal was a perfect example of the indecision and uncertainty plaguing investors.

We are well aware of the catalysts. Economic growth has slowed, employment data has weakened, European debt issues remain unresolved, Congress can't get it together on debt either, and the list could go on and on.

I've said it before, but the main thing supporting stock prices is earnings. Despite all the concerns about slowing growth, we have not seen any significant earnings warnings. And with earnings season just a few weeks away (Alcoa AA reports on July 11), the window for warnings is closing.

The Fed didn't say much that was helpful after the latest FOMC meeting yesterday. The Fed acknowledged that "some of these headwinds may be stronger and more persistent than we thought."

The Fed also left the door open for more quantitative easing, saying that the Fed is "...prepared to take additional action, obviously, if conditions warranted..." But we won't see QE3 unless economic data remains weak for another couple months, or if there's some kind of crisis, most likely coming from Europe's debt problems.

In fact, the Fed has a ready excuse to open the liquidity spigots if Europe takes a turn for the worst. And almost right on cue, ECB President Trichet said that debt issues are "...the most serious threat to financial stability in the European Union."

He went on to say his risk indicator is flashing red.

The International Energy Agency (IEA) has started its own stimulus program. It will be releasing 60 million barrels of oil from strategic reserves around the world in a bid to push oil prices down by increasing supply.

Could this also be plan for certain countries to raise some cash without raising eyebrows? Sure, why not. The U.S. will be helping out by contributing 30 million barrels to the oil stimulus program. At $90 a barrel, that's $270 million.

The program will reportedly only last 60 days. But that may be plenty of time to steamroll stubborn oil bulls (of which I am one).

Oil prices are getting killed this morning. If this move pushes crude prices to the mid-$80s, I recommend buying oil stocks with both hands. This oil stimulus isn't the same thing as quantitative easing. You can't just print more oil. Any depletion of oil reserves will be replenished at some point, which would obviously push oil prices higher.

The IEA's move on oil makes it more difficult to use oil prices as a sentiment indicator, though it does underline the importance of oil prices. At least we still have Apple AAPL. Apple is re-testing its $320 support level today.

Clearly, it would border on insanity to short Apple shares. But the action $320 can tell us of stocks in general will rally, or fall further.

Whatever happens with Apple, investors should own the companies who are supplying chips and other technology that feeds the boom in wireless device sales. Given the current weakness, these stocks are offering attractive entry points ahead of earnings.

Click here to learn more about my top wireless stocks, and as always, feel free to write me anytime at ianwyatt@wyattresearch.com