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WALL STREET CRAPS MARKET OBSERVATIONS FOR JUNE 26, 2012

June 26th, 2012 Comments off

MARKET OBSERVATIONS FOR JUNE 26, 2012: The stock market rally of the last few weeks is taking a breather. With Monday’s sharp drop, I would expect a retest of the early June lows sometime early next week. That would allow several of the internal indicators to set up for another buy signal.

The McClellan Summation Index is looking toppy and will probably zig-zag down to another point slightly above the early June lows. This would be a normal pattern for setting up a buy range to enter the market.

Other key market indicators show the following:

For now, the best advice is to remain on the sidelines getting ready for a buy signal in the near term either late this week or next. This may not be a major buy signal but one for a short run up. Don’t expect all stocks to participate in this run so avoid the temptation to buy low with energy stocks. Choose the broad-based ETFs like DIA and QQQ for accumulation. If things set up perfectly, then you could also make a side-bet on leveraged ETFs such as DDM and SSO.

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In regards to Apple (AAPL), the stock seems to have topped out for the near term at 590 and could head lower towards a good buy range just above 500. The Money Flow Indicator has a reading of 60 after hitting a short-term upside target of 80 and is quite a long distance to a buy signal around 20.  The “Full Stochastics Indicator” is in a downwards zig-zag formation with a good chance of heading south toward a new buy area under 20 after Monday’s action. That would be the best time to buy APPL for a trade up. The price at that time would probably between its previous low at 522 and the 200-day moving average which now stands around 501. I’d start making small bets on any move under 530 if that should occur. The last move down could turn out to be an intraday spike.

WALL STREET CRAPS MARKET OBSERVATIONS FOR JUNE 17, 2012

June 17th, 2012 Comments off

MARKET OBSERVATIONS FOR JUNE 17, 2012: The stock market rally has taken many investors by surprise. This could lead to a “melt-up” type rally that is fueled by panic-stricken short-sellers covering their losing positions. But this is not an optimal time to buy the general market. The correct way to play this current market is to wait for the next oversold condition which is likely to be a retest of the June 1st lows. Otherwise, step aside and watch the show. The fact is you can’t catch all of the minor rallies if you’re weighing the risks.

The McClellan Summation Index has ended its decline and started a new uptrend. This usually precedes the external bottom in prices by a few weeks. Look to buy on any weaknesses if the market comes back to retest its June lows.

Other key market indicators show the following:

For now, the best advice is to remain on the sidelines awaiting weakness to buy on the long side. Most of the market indicators are mid-range and makes us aware that the market can move in either direction.

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In regards to Apple (AAPL), the stock is trading in an unusually tight range and not leading the market to the upside. On the shorter term, the Money Flow Indicator has a reading of 69 after hitting a short-term upside target of 80. The “Full Stochastics Indicator” is in a downwards zig-zag formation with a good chance of heading south toward a new buy area under 20. That would be the best time to buy APPL for a trade up. The price at that time would probably between its previous low at 522 and the 200-day moving average which now stands around 495. I’d start making small bets on any move under 530 if that should occur.

Incidentally, the stock that appears to be closer to a buy range in both price and time than Apple is Google (GOOG).

WALL STREET CRAPS MARKET OBSERVATIONS FOR JUNE 11, 2012

June 11th, 2012 Comments off

MARKET OBSERVATIONS FOR JUNE 11, 2012: The stock market broke to new lows on Monday and Tuesday of last week. The reversal last Tuesday may have been the end of the correction with the cover story being the bad economic news from Europe. The new uptrend is currently in a “reverse head and shoulders” chart pattern with a little bit of backing and filling needed over the next day or two. With the deeply oversold bottom in terms of breadth and sentiment (but not necessarily in the extent of prices in major indices), there is now a strong chance of the stock market going into a sustained rally phase over the intermediate term.

The McClellan Summation Index appears to have ended its multi-month decline last week. Time symmetry tendencies indicate that a matching rally phase should take us well into the summer in terms of volume and breadth. Keep in mind that the McClellan Summation Index reflects the internal market and will precede price movements which is the external market.

Key market indicators shows the following:

For now, the best advice is to buy on weakness over the near term in less risky positions. Last Tuesday was the time to buy riskier vehicles like leveraged ETFs. You can buy value-oriented ETFs and stocks on weakness. This decline may only last a few days so you may have to act quickly on this.

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In regards to Apple (AAPL), this current rally in the stock is fueled by expectations on upcoming positive announcements and strong fundamentals. On the shorter term, the Money Flow Indicator has a reading of 79 which is closer to a top than a bottom. But with this particular stock, the Money Flow Indicator can sustain a high reading while the stock continues to climb. It may be too late to buy this stock individually so the QQQs are probably the best way to participate in Apple’s rally.

WALL STREET CRAPS MARKET OBSERVATIONS FOR JUNE 3, 2012

June 3rd, 2012 Comments off

MARKET OBSERVATIONS FOR JUNE 3, 2012: The stock market has broken through its basing pattern and can be expected to start a new leg down in price. That should lead to another chance to bottom out during the second or third week of June.

The McClellan Summation Index continues to confirm the market correcting heading towards lower prices. We may even see some climatic panic in the near term which will lead to a big bounce and then a retest of the bottom. And while breadth and sentiment have been negative all through the month of May, the price of the Dow Jone Industrials has not dropped enough to create the kind of negative emotions that usually mark a tradable bottom.

The following market indicators show that Monday is probably not an ideal day for taking action:

For now, the best advice is to keep your powder dry on the sidelines and let the market set itself up for its next move up. The next move down could be nasty so patience is the name of game. The next bottom over the near term may only be a bounce to relieve downside pressure. If we buy this next bottom, be ready to ride it up quickly and get out. The target date for the next low is June 12 plus or minus 1 day.

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In regards to Apple (AAPL), this current bounce off of the 1/3 retracement of its prior rally appears to have finished. The next low in Apple should come during the middle of June (previous bounces have been in mid-April and mid-May) and below the previous lows around $522. I’d guess that this next mid-June low could come between $503 (a 50% retracement of the previous rally) and its 200 day moving average around $488. Keep in mind that this low could be a spike down intraday and that a sharp trader should be ready to pull the trigger beforehand – anytime the price of Apple goes below the previous low of $522.