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.
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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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.
MARKET OBSERVATIONS FOR DECEMBER 28, 2012: The stock market has set itself up for a relief rally beginning in the next day or so. Oversold readings in both the Nasdaq and NYSE breadth indicators make this a low-risk buying opportunity. This rally should coincide with good news from the resolution of the “fiscal cliff.” Be ready for a sharp but short rally that may take the Indices to new highs. Lower your risk by being diversified in broad-based Exchange-Traded Funds. My favorite trading vehicle for this rally is the QQQ Exchange-Traded Fund. Since Monday December 31st is a short trading day, be sure to take your positions early in the day so you don’t miss out!
Key market indicators show the following:
For now, my advice is to take a small to moderate position in the stock market based on breadth indicator buy signals in the NYSE and Nasdaq. The quiet trading day of Monday December 31st is time to take your positions for a sharp and short rally at the beginning of the year. Be sure to keep your risk down by being fully diversified and non-leveraged in case the downtrend continues for a few more days.
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As for Apple (AAPL), the chart looks like a possible move to under 430 which doesn’t seem possible at this moment. But we have to take a step back and remember that the stock was in the 300s just last year. For now, it seems to be finding support at 500. I would expect a brief move into the 400s in order to generate some weak panic selling. But given its action the past week, I wouldn’t be surprised if it goes up to the 565 area on the next rally. The stock flashed a brief buy signal last Friday in its Money Flow Indicator and you can buy it today at an even lower price than last week.
APPLE TRADING & INVESTING STRATEGIES: The most popular stock on the Exchange is the subject of controversy everyday in the financial media. But almost all of the positive news about the company itself is of little benefit to the performance of the stock. But on Friday December 21, the stock of Apple may have found a significant short-term bottom.
Most investors in the stock of Apple (AAPL) will look for fundamental reasons to justify their position in the stock. But with so many shares purchased at much higher prices, the stock of Apple sits in a place where both fear and greed could cause a big price move in either direction. A smart investor must look under the surface for clues as to when it is time to move. That time could be this Monday, December 24.
On the shorter term, the Money Flow Indicator has a reading of 19 and needs to close below 20 in order to generate a buy signal. This one indicator allowed me to take a position in Apple on the exact day of bottom on three different occasions in the past year. So be ready to make a small side-bet on Apple based on this one indicator as it is saying that it is time to move right now.
(Note: Don’t bet too much because there is also room for more downside in the stock, the general market is only neutral, and the threat of one more “fiscal cliff” disappointment still hangs over the market. If you choose to speculate on this, only make this a simple $5 bet in a $120 bankroll.)