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WALL STREET CRAPS MARKET OBSERVATIONS FOR JUNE 17, 2012

June 17th, 2012

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).

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