MARKET OBSERVATIONS FOR May 29, 2013: The stock market reached new highs on Monday in a possible “key reversal day.” This could end up being the “internal high” for the market. With that in mind, a smart trader or investor can expect a new closing Dow high in the next one to three weeks. If that new Dow high comes without corresponding strength in other major indexes or if the market becomes overbought on its march up to a new high, then the odds are good that the final top is in. Then you could expect the long-awaited correction to begin at that time with a minimum of one month in duration & a possible 50% retracement of the previous advance.
Key market indicators show the following:
For now, my advice is to remain on the sidelines and let the market set itself up for its next big move. The short-term indicators are near “buy” readings so any further declines should be contained.
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The indicators for Apple (AAPL) read as follows:
- Relative Strength Indicator = 54
- Ultimate Indicator = 52
- Money Flow Indicator = 46
This means that the stock of Apple is mid-ranged and can go in either direction. There isn’t any pressure on the stock to go in one direction verses the other. I’d personally stay away from this issue since it could just as easily go down 80 points as up.
MARKET OBSERVATIONS FOR May 13, 2013: The stock market reached new highs during this past week which were largely confirmed by other major indicators. But it wasn’t necessarily overwhelming strength across the board. This could be setting up the “head” of a potential “head and shoulders” top. That said, it implies that the topping process has much more time to chew up before getting anywhere near a full-blown declining phase. I’d look instead for the market to correct into another buying opportunity for a ride up into an overbought condition as it forms its right shoulder.
Key market indicators show the following:
For now, my advice is to remain on the sidelines and let the market set itself up for its next big move. It could be an oversold condition on the next decline which would set up a short but profitable ride up into its next overbought condition. If we get a few more closing highs that is not confirmed by strength, we could reach a point of exhaustion to the upside.
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As for Apple (AAPL), it’s the same advice as last week. The stock has finally broken above its Bear Market Optimized 50-Day Moving Average. After hitting its price pivot points in the 417-392 range, the stock of Apple rallied enough to end its Bear Market. But it doesn’t automatically mean that the stock will go into an instant bull market. Instead, the stock of Apple could remain in a neutral position while it “backs and fills” in order to form a stronger base for a more sustainable rally. I’d be looking to gradually accumulate the stock on a retracement into the 423-400 price range.
MARKET OBSERVATIONS FOR May 6, 2013: The stock market reached a new closing high on Friday. This blog anticipated this new high to be full of non-confirmations across the board. But this did not materialize. Instead, this new high was indeed confirmed by strength in the NASDAQ and neutral sentiment readings. Expect the rally to extend another 2-5 weeks at a minimum until a new high is reached in the Dow that is not confirmed by corresponding strength in other key areas.
Key market indicators show the following:
For now, my advice is to remain on the sidelines and let the market set itself up for its next big move. A short term top could materialize in the next or so. The resulting decline could present us with a buying opportunity in the tech sector. But in the meantime, the stock market continues to “climb a wall of worry.”
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As for Apple (AAPL), the stock has finally broken above its Bear Market Optimized 50-Day Moving Average. After hitting its price pivot points in the 417-392 range, the stock of Apple rallied enough to end its Bear Market. But it doesn’t automatically mean that the stock will go into an instant bull market. Instead, the stock of Apple could remain in a neutral position while it “backs and fills” a stronger base for a more sustained rally. I’d be looking to accumulate the stock on a 50% retracement into the 424-403 price range.
MARKET OBSERVATIONS FOR APRIL 29, 2013: The stock market may be headed to its final closing high in the Dow Jones Industrial Average. It is approaching overbought levels while remaining 150 points below its previous high. From a technical standpoint, the final closing high in the Dow Jone Industrial Average while not be confirmed by the majority of other key indicators or averages. Be on the lookout for this final solo march up by the Dow. On the other hand, if the Dow does have support from the majority of other averages, then this rally can continue higher into June.
Key market indicators show the following:
For now, my advice is to remain on the sidelines and let the market set itself up for its next big move. A major top could be ahead of us shortly. But the neutral sentiment readings cause me to think that the market still needs more time on the upside. Stay flexible and read the market as it moves in either direction for clues.
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MARKET OBSERVATIONS FOR APRIL 15, 2013: The stock market continues to climb the proverbial “wall of worry” and in the process causing short-sellers to throw in the towel. But with a few key oscillators near sell levels, I would expect a short correction in the near term. That would be followed by an upside test of the recent highs. That next rally should probably tells us whether it is the last move in this rally or if there is more to go. I wouldn’t rule out the idea that the current rally could last into June.
Key market indicators show the following:
For now, my advice is to remain on the sidelines and let the market set itself up for its next big move. A short-term top is only a few trading sessions away. That could lead to a short & sharp dip that may be worth buying into. But it appears that the upside is generally limited from this point on.
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As for Apple (AAPL), the stock has drifted back down towards it base around 420. Meanwhile, the Bear Market Optimized Moving Average for Apple stands at 451. The price pivot points looks for a possible move to the 417-392 range. It may take such a move in order to get the last weak hands to give up their stocks to stronger long-term hands. After such a time, the good news will follow about the next dividend boost resulting in a new Apple advance. Be patient and wait for a possible move into this lower price range.
MARKET OBSERVATIONS FOR MARCH 30, 2013: The stock market hit two new rally highs this past week, despite the negative-news coming from Europe. This relentless rally still does not show any real signs of correcting downwards in price. What it has done is chew up time by moving sideways and allowing the technical features of the general market to reach equilibrium. This means that the stock market can still go in either direction over the near term.
Key market indicators show the following:
The choppy action in the market last week allowed the market to neutralize its overbought condition. The general market is up against resistance at the present level. This is one of those times in which it’s too late to buy, too risky to sell short, and probably one in which a savvy market player would be willing to “take some chips off of the table.”
My advice is to keep your powder dry in case the market has a sharp near term correction during the months of April and May. Such a scenario would set up a good buying opportunity in mid-May.
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MARKET OBSERVATIONS FOR MARCH 9, 2013: The stock market hit consecutive new highs during the last 6 trading sessions. This is a classic example of letting a powerful move run its course and resisting the urge to short. The upside momentum has probably peaked at this time, but after a short correction, I’d expect at least one more overshoot rally to a new closing Dow high. In order for that scenario to pan out, we first need a sharp and broad correction lasting a week to 10 days. Then one final narrow advance up to a new high which is not confirmed by breadth and other broad-based averages.
Key market indicators show the following:
With many key breadth indicators at or near sell signal levels, I would be looking for a correction to begin on Monday. This will be the first leg down with most likely a retest of Friday’s highs in one to two weeks. Since the “Wall Street Craps Method” discourages both leverage and shorting the market, the best thing to do is remain on the sidelines and let the market correct. Then look for either a short-term upside opportunity in the general market or a trade in the Long Treasury Bond ETF (TLT).
Remember that the sentiment indicators show that market participants are still neutral. This is not a sign of a major top. So a correction here would give nimble traders and investors a chance to ride this market up when the rally resumes.
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MARKET OBSERVATIONS FOR FEBRUARY 25, 2013: The stock market hit a new high last Tuesday before embarking on a sharp decline. Friday’s advance recovered most of the previous two-day decline. The market is in the unique position to either test last Tuesday high or test last Thursday low. Don’t be surprised if the market follows a common pattern of heading down towards the end of the month (and rallying in the beginning).
Key market indicators show the following:
With many key breadth indicators near buy signal levels, I would welcome a return to last Thursday’s low with a chance to go long towards an intermediate top in March.
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MARKET OBSERVATIONS FOR FEBRUARY 17, 2013: The stock market tested its February 1st during this part week. I would expect one or two more tests of these highs (Dow 14018) in the coming 10 trading days. If we should get a short and sharp decline, it could be an opportune time to go long for a quick trip back up to the old highs. The internal breadth indicators are largely neutral and show that the market has been under a mild correction from within.
Just because the market isn’t going up, don’t assume that it has to go down. It is entirely possible that the market is simply chewing up time before continuing its march higher. And speaking of March, that is the most likely month to expect a more sustained drop in the market. Right now, there are just too many bears predicting the end to this rally. When the bears get quiet, it will probably mean that the final top of this rally is in. We may be close to that time, but I don’t think we are there quite yet.
Key market indicators show the following:
Last week, I mentioned the Long-Term Treasury Bond Fund (TLT), Gold Miners (GDX), Silver Trust (SLV), and the China ETF (FXI) as possible speculations. But based on last Friday’s action, I will resist the temptation to “catch the falling knife” and avoid these stocks until things settle down. As I stated in my book, Wall Street Craps: How to Play Today’s Hot & Cold Stock Market For Fast Money With Less Risk, “buying in a panic is just plain risky.” Most high-percentage bottom are not at points of maximum fear, but instead at points of maximum apathy.
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MARKET OBSERVATIONS FOR FEBRUARY 11, 2013: The stock market looks like it is about the test its February 1st highs. It is only 17 points away the old highs in the Dow. You can expect one to three consecutive closing new highs in this index before it’s ready to turn down for a more extensive correction. If these new highs are not confirmed by equal or greater strength in the Dow Transports, S&P 500, and Nasdaq indices, it would signal that the general market has lost momentum to the upside. But since the internal breadth indicators are largely neutral, the market may simply consolidate at this higher level instead of crashing down. That would confuse and frustrate a lot of traders by doing so.
Key market indicators show the following:
The market is about to test the February 1st highs. The risk-reward ratio is not good for a more extended move to the upside. And because of neutral readings in the breadth indicators, I would not expect the market to drop much either. This is a time to step aside from the market and keep your powder dry for special situations that may appear in either the Long-Term Treasury Bond Fund (TLT), Gold Miners (GDX), Silver Trust (SLV), or the China ETF (FXI).
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