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WALL STREET CRAPS MARKET OBSERVATIONS FOR OCTOBER 21, 2012

October 20th, 2012 Comments off

MARKET OBSERVATIONS FOR OCTOBER 21, 2012: The stock market just experienced a sharp 1-2 day correction that was mainly centered around technology issues. The Dow Jones Industrial Average’s most recent closing high occurred on October 5th. The “One Month Rule” puts the next bottom no sooner than November 5th. In May of this year, the market experienced a 28 trading day decline. By the Law of Recency and the Law of Rhythm, the stock market could easily follow the same pattern and present an ideal buying opportunity within two weeks.

Key market indicators show the following:

For now, the best advice is to remain on the sidelines getting ready for a chance to re-enter the market on more short-term weakness. The ultimate intermediate term bottom, though, could be another 10 trading days away.

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In regards to Apple (AAPL), the stock has had its first bounce from a slightly oversold condition. It has an RSI reading of 33, ULT reading of 38, and MFI reading of 35. The 200 day moving average is at 579. With a current price of 609, I would first begin accumulating the stock on any move under 600. It is likely to spike down to 579-580 on an intraday basis, but only the most nimble traders will be able to get this price. I’d look to any move under 590 as a “Golden Opportunity” to buy Apple for a 2013 run towards $950-$1000.

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WALL STREET CRAPS OBSERVATIONS FOR OCTOBER 9, 2012

October 8th, 2012 Comments off

MARKET OBSERVATIONS FOR OCTOBER 9, 2012: The stock market is stalling at the top of its trading range right now. Any new closing highs in the Dow Jones Industrial Average will surely not be confirmed by the other key indices. I would look for a further and deeper correction in order to get the necessary sentiment shift that is needed before going strongly higher. But overall, this is a time in which the risk vs. reward is not that enticing for stock market bulls. I will continue to look for side-bets to play lightly in other areas like gold, bonds, and emerging markets until the US stock market sets itself up for a more major move.

Key market indicators show the following:

For now, it would be prudent to move out of stocks and into cash. This high-level consolidation could have a lot of non-confirmations of strength on any new Dow Jones Industrial closing highs. A cluster of new closing highs unconfirmed by the Transportation Index and Nasdaq Index would probably set up the market for a tumble shortly afterwards.

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In regards to Apple (AAPL), the stock continues to correct amid a lot of negative news. My guess is that this is setting up a great buying opportunity either late in October or early in November. The price level will probably be under the 600 mark and near its 200 day moving average around 580. But if we receive confirming buy signals from the Ultimate Indicator and Money Flow Indicator, it would be time to start accumulating the stock either through the stock itself, the QQQ ETF, or XLK ETF. As of Monday’s close, the Ultimate Indicator reading is 33 and the Money Flow Indicator is 31. These readings are only a few days from the first bounce in price for AAPL.

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