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WALL STREET CRAPS MARKET OBSERVATIONS FOR JULY 11, 2012

July 11th, 2012

MARKET OBSERVATIONS FOR JULY 11, 2012: The stock market has been in a steady decline for the past 9 sessions according to the daily TRIN indicator which reads the undercurrent in terms of breadth and volume. This sets the stage for a short-term tradable rally between July 17 and July 19 if this current trend continues in this “slow drain” (in price, breadth, and behavioral psychology) fashion.

The McClellan Summation Index appears to be topping out or setting up for one more run to the upside. For right now, I would not interpret this indicator as signaling anything in particular. (Note: Sometimes, even the best indicators do not have definitive readings.)

Other key market indicators show the following:

For now, the best advice is to remain on the sidelines getting ready for a near term bottom in the stock market. During this correction, watch the NYSE Breadth Oscillator and Nasdaq Breadth Oscillator for oversold readings in the “ULT” and “Full Stochastics” indicators for a possible short term buying opportunity. (Note: This may be only a minor movement which would call for making only small side bets on the upside.)

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In regards to Apple (AAPL), the stock has shown strength apart from the general market. In market declines, the strongest sectors tend to be the last ones to drop. The stock of Apple has become sort of an asset class all by itself! The Money Flow Indicator has a reading of 54 and has hardly moved since last week’s update. The “Full Stochastics Indicator” and the “Ultimate Indicator” have already reached overbought readings and a decline to at least the mid-range would be expected before another run to the upside begins.

In the event of a general stock market buy signal, Apple would be one of the prime candidates for participating on the upside along with the QQQ, DIA, DDM, and SSO Exchange-Traded Funds.

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