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.
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.)
MARKET OBSERVATIONS FOR DECEMBER 22, 2012: The stock market appears to be setting up for an obvious top to coincide with an agreement to the “fiscal cliff” matter. Friday’s retreat was merely a pause before this last rally attempt. I would expect that rally to begin just after Christmas. But otherwise, the market is closer to an intermediate top than a bottom and should have most investors out of the market. Note: Beware of one more downside scare from the “fiscal cliff” matter. It could come during the middle of next week and could be very sharp and costly to overextended traders!!! So be careful.
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a possible intermediate top in January. For nimble traders, there is a small bottom possibility on Monday morning if the market should go into a quiet retreat. If you should be tempted to play this short rally, be ready to sell whenever a resolution gets passed for the “fiscal cliff.” On the other hand, be on the lookout for one more sharp scare from a disappointment regarding the “fiscal cliff.” That could happen right before New Years Eve!
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MARKET OBSERVATIONS FOR DECEMBER 13, 2012: The stock market appears to be headed towards a bottom sometime after Christmas. With the “fiscal cliff” behind itself after a likely scare, I’d expect the month of January to be a good one to the upside. I wouldn’t get too clever with the advance and avoid “stock picking.” Go with broad-based ETFs for a smoother ride to a top in late January or early February. My choices are DIA, SSO, TLT, and QQQ.
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a buying opportunity after a good scare from the “fiscal cliff” news. That should occur sometime during the last week of December. I’m also watching Apple (APPL) closely for a possible Money Flow Indicator buy signal which could be good for a quick 100 point upside ride. (The stock should be in the 400s at that time!) The Money Flow Indicator for Apple has picked the last 3 bottoms within a day when its reading is below 20. Right now, the indicator reading is 30.78.
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MARKET OBSERVATIONS FOR NOVEMBER 29, 2012: The stock market has rallied from its deeply oversold condition after the election. The threat of the “fiscal cliff” makes the near-term market one for swing trading purposes only. The market rallied Wednesday on good news concerning compromises for solving this so-called “fiscal cliff,” but it is more likely that a sharp retreat will occur during December to retest its mid-November low instead. With the market short-term overbought, be looking for weakness into the December 12-18 time period to take trading positions for a run into the New Year.
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a short-term top in this general area. I would expect some sort of bottom to occur in mid-December with a possible “Santa Claus Rally” going into the New Year. With clear sell signals in the NYMO, NAMO & Stock vs. Bond Indicator, the upside looks limited with news being the only generator of strength in the market.
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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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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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MARKET OBSERVATIONS FOR SEPTEMBER 30, 2012: The stock market is still going through a very shallow correction in terms of price. I expect the old highs to be tested soon. The stock market may need to back and fill for another week before taking off again for the upside. While an argument can be made that the direction should be down, the current oversold condition of the market in terms of breadth makes me think that there is more to this rally. So don’t get complacent!
Key market indicators show the following:
- McClellan Summation Index – has started trending downwards. It is a warning that market breadth is going south.
- Investor Sentiment – is now mid-ranged in the short-term and long-term. The market can go either way.
- NYSE Breadth Oscillator – Ultimate Indicator reading of 33 is slightly above its mid-week reading of being oversold. I would expect another move down to retest the correction lows before heading back up.
- Nasdaq Breadth Oscillator – Ultimate Indicator reading of 34 after being in oversold range for most of last week. This confirms the NYSE Breadth Oscillator and it is expected to head back up shortly…perhaps after one more attempt to the downside.
- Risk On/Risk Off Indicator -Ultimate Indicator reading of 38 after barely touching oversold reading. This also confirms the breadth indicators of an oversold market.
For now, the best advice is to wait for a retest of either last week’s lows or the previous week’s highs within days. The market could surprise a lot of people by continuing it rally against the backdrop of a classic “wall of worry.”
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In regards to Apple (AAPL), the stock has had its typical 50 point correction this past couple of weeks. It may go up from here to challenge its recent high at 705 or go down to its 200-day moving average around 570. Near-term the stock is close to its first oversold reading in the Full Stochastics Indicator. That oversold reading would be the first place to start accumulating this stock for a trade.
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MARKET OBSERVATIONS FOR SEPTEMBER 25, 2012: The stock market is going through a very shallow correction in terms of price. I would expect the market to begin a short rally any day now as part of institutional window dressing. That rally should take the Dow to a new closing high. But the early part of October could bring the long-awaited swing to the downside in order to counter-balance the excessive euphoria and complacency in the market. That move down could end up being steep and swift as well. So be prepared!
Key market indicators show the following:
For now, the best advice is to remain on the sidelines getting ready for a retest of last week’s highs. For nimble traders, a short-term buy signal could come around Wednesday with further weakness in the market. That buy signal would be for a very short ride up to new highs. Be ready to sell out quickly if the new high does not have strength in other areas to confirm.
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In regards to Apple (AAPL), the stock may be finally making a case for weakness. A Wall Street Craps trading tool called “The Apple/Google Trading Indicator” has just flashed a sell signal on Apple. This indicator shows the relative strength of Apple vs. Google/Android in terms of leadership. I use it as an early sign of strength or weakness in the world’s most popular company, Apple. And today, it says “sell.”
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