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Archive for January, 2013

WALL STREET CRAPS MARKET OBSERVATIONS FOR JANUARY 28, 2013

January 27th, 2013 Comments off

MARKET OBSERVATIONS FOR JANUARY 28, 2013: The stock market’s advance continues its relentless push to new rally highs. According to my count, Friday’s advance was the 13th successive new high on this march up. This usually equates to a point of exhaustion and a period of non-advance. My guess is that we will see a high level consolidation in this area before a continuation of the advance. I don’t think that the market internals are overbought enough to¬† warrant a decline. In fact, the internal breadth indicators are surprisingly neutral. It’s the price and behavioral indicators that are showing extremes.

Key market indicators show the following:

Like last week, my advice is to stay or move to the sidelines and let the market set itself up for a possible buying opportunity. The stock market may surprise the public by continuing to rally instead of decline over the intermediate term. Don’t be surprised if the next phase of the market is a short squeeze inspired narrow advance. But right now, the rally is still broad-based and solid.

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THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE

January 21st, 2013 Comments off

THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE:I have devised a new indicator for Apple which I call the “Apple Bear Market Optimized Moving Average“. It is a 50-day exponential moving average of the price of Apple. It currently has 3 points that served as the top of small rallies since early October 2012. This will help those who want to buy the stock low but want to get out before it turns down again. As of today, the moving average is at 539.

With so many traders, investors, and institutions having paper losses in this popular stock, it appears that the one thing that people don’t expect is a bear market in this issue. Almost all of the fundamental projections for the stock are in the 700-800 price range. Until these weak hands get scared out of the stock, my technical and behavioral indicators point to lower prices. It seems hard to fathom, but it may take a move to $425 before panic sets in with this stock. Only then will the stock of Apple trade from weak hands to strong ones. There are just too many investors relying on “hope” which is almost always a bad thing to bet on when playing in the stock market.

Despite what Tom DeMark said on CNBC, I would contend that the stock of Apple has not fully exhausted itself on the downside. So my word of advice is simply to trade carefully with this issue. And if you buy it, do it incrementally on the way down as an investment rather than a trade.

Until the “Apple Bear Market Optimized Moving Average” is broken to the upside, the trend is down for this popular stock.

WALL STREET CRAPS MARKET OBSERVATIONS FOR JANUARY 21, 2013

January 21st, 2013 Comments off

MARKET OBSERVATIONS FOR JANUARY 21, 2013: The stock market’s advance is running into resistance as it returns to its previous high. It has now reached its 9th successive new high in this rally since mid-November. Therefore, its momentum should soon run out (rarely over 13 successive new highs in any rally). But internally, the general market is not overbought. In fact, the 10-day ARMS readings are showing that the market is even slightly oversold. This surprising fact leads me to believe that any correction will be shallow and short-lived. Instead, any decline should be viewed more as a possible buying opportunity for another ride up.

Key market indicators show the following:

For now, my advice is to stay or move to the sidelines and let the market set itself up for a possible buying opportunity. The stock market may surprise the public by continuing to rally instead of decline over the intermediate term.

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WALL STREET CRAPS MARKET OBSERVATIONS FOR JANUARY 13, 2013

January 12th, 2013 Comments off

MARKET OBSERVATIONS FOR JANUARY 13, 2013: The stock market is continuing its rally from the “fiscal cliff” resolution. The internal indicators show that this last week has risen despite weakness in breadth. With a mixed bag of conflicting signals in price, sentiment, and breadth, a wise trader should be ready to “buy the dips” and “sell the rips.” Last Friday’s close was the second consecutive “new high” in this current rally. I would not be surprised if this current phase tops out either Tuesday or Wednesday in the coming week. That would be followed by an initial correction and a short, sharp retest of the highs. That kind of action will reveal much about the staying power of this rally. There is a decent chance that this market could surprise many by having much further to go on the upside.

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 easily occur by the middle of next week. The following dip might be one in which to take positions if the breadth indicators become oversold (very possible). Right now, the overall market is a bit too extended. This almost always leads to a correction in order for the market to get healthy again. That correction may only be a short one so be ready to get in on the action.

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As for Apple (AAPL), the stock has drifted back down towards it base around 515-500. The RSI, Ultimate Indicator, and Money Flow Indicators do not show that it is a time to buy yet. For those who only follow the external price action of the stock, it is tempting to buy at the current levels. But to me, it seems like too many investors are “wishing” for the stock to move up because they are trapped at much higher purchase prices. This makes me think that the stock needs another down-leg or news scare in order to shake out the weak hands. Most current holders of the stock are now disappointed that it has not participated much in this year’s rally and the expiration of tax-selling. That disappointment translates into “nervous hands” and “scared money” which will cause those people to get emotional at precisely the wrong time. Keep this in mind and approach Apple cautiously from a contrary trading perspective.

WALL STREET CRAPS MARKET OBSERVATION FOR JANUARY 6, 2013

January 6th, 2013 Comments off

MARKET OBSERVATIONS FOR JANUARY 6, 2013: The stock market’s late December oversold breadth condition set itself up for last week’s sharp news-related rally. But sentiment readings should put a lid on anymore sizable upside action. A few more up-days should also move the breadth oscillators into “sell” mode. Also the “Risk On/Risk Off Indicator” shows that the “Risk On trade” has extended to its normal range again limiting much upside action. With the upside being limited, this is not a time to be buying and one to be moving to the sidelines (and waiting for the next high-probability opportunity).

Key market indicators show the following:

For now, my advice is to stay of the sidelines and let the market set itself up for its next big move. Last week’s update presented a scenario for taking advantage of the resolution of the “fiscal cliff,” but you would have had to move quickly on New Year’s Eve morning in order to capitalize on it. In addition, last week’s rally points to another trading tip which is “don’t watch breaking news while you’re trading” because you’ll get easily talked out of making a move (which happened to me!!!)

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As for Apple (AAPL), the stock moved up sharply after a positive article in Baron’s over last weekend, thereby blowing our chances to buy it on a quiet New Year’s Eve trading morning. But by midweek, it had hit its 250-day moving average around 555. From here, it could still have another leg down but I’ll be watching its internal signals (Money Flow, Ultimate Indicator, RSI) for clues more so than its external price moves. So overall, Apple is in “no man’s land” between 555 and 500 and is setting itself up for its next big move. This could come in another 10 days or so at the earliest.