Wall Street Craps – 2012 Global Ebook Finance Award-Winner

MARKET OBSERVATIONS FOR May 29, 2013: The stock market reached new highs on Monday in a possible “key reversal day.” This could end up being the “internal high” for the market. With that in mind, a smart trader or investor can expect a new closing Dow high in the next one to three weeks. If that new Dow high comes without corresponding strength in other major indexes or if the market becomes overbought on its march up to a new high, then the odds are good that the final top is in. Then you could expect the long-awaited correction to begin at that time with a minimum of one month in duration & a possible 50% retracement of the previous advance.

Key market indicators show the following:

• Investor Sentiment – Short-term = 50 neutral/ long-term=70 – slightly overbought
• NYSE Breadth Oscillator – Ultimate Indicator reading of 17 – oversold buy
• Nasdaq Breadth Oscillator – Ultimate Indicator reading of 29 – oversold buy
• Risk On/Risk Off Indicator – Ultimate Indicator reading of 52 – neutral
• NYSE Summation Index – Still only mid-range towards a major buy signal

For now, my advice is to remain on the sidelines and let the market set itself up for its next big move. The short-term indicators are near “buy” readings so any further declines should be contained.

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The indicators for Apple (AAPL) read as follows:

• Relative Strength Indicator = 54
• Ultimate Indicator = 52
• Money Flow Indicator = 46

This means that the stock of Apple is mid-ranged and can go in either direction. There isn’t any pressure on the stock to go in one direction verses the other. I’d personally stay away from this issue since it could just as easily go down 80 points as up.

THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE APRIL 20, 2013

The so-called “Apple Bear Market Optimized 50-Day Moving Average” currently stands at 443. The current price as of Friday’s close is 390. The 417-392 price range for accumulating the stock that was mentioned on the March 30th Update is now at its lower end. So based on price alone, this would seem to be a place to start buying. But in terms of the internal indicators, it may still be a little too early to do so.

(Click here for the chart for Apple)

Internal Indicators for Apple currently read as follows:

* Relative Strength Reading:  28.00 which is a buy signal under 30.00

* Ultimate Indicator Reading: 30.66 which is just barely missing the buy signal under 30.00

* Money Flow Indicator Reading: 33.77 which is a few points away from flashing a buy signal

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Based on these indicators, I would say that the stock of Apple is very close to a buy signal.  But it would take a triple buy signal for me to start accumulating the stock. I am especially cautious about buying Apple until we see a clear Money Flow Indicator buy signal well under a reading of 30. At that time, I would gradually wade into the position with the idea of trading it as it moves back up to test its dominate 50-day moving average around 440.

What I’m trying to gauge, is whether those who bought the stock last year on the much-publicized march up have finally given up on Apple. It may still take an obvious piece of bad news in order to get the fundamentally-trained holders of the stock to capitulate. It could be now, but it could also be at a later time. But for now, it would appear that a trading rally is close at hand.

Trading Note: That rally could start with a quick bounce, a scary but successful retest on obvious bad news, and then a move up to challenge the moving average. This could start happening next week so be ready.

THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE MARCH 20, 2013

On March 5th, the Money Flow, Relative Strength, and Ultimate Indicators triggered buy signals for the stock of Apple. Thus, this triple buy signal made it possible to take initial positions in this undervalued, oversold, and unpopular high-quality stock near the absolute bottom around 420.

(Click here for the chart for Apple)

Since that time, the price of Apple has rallied to a current price of 452. The so-called “Apple Bear Market Optimized Moving Average” stands at 464, just 12 points away. This moving average has served as the cap on three previous rallies in Apple over the past several months. As long as the price of Apple stays under the Optimized Moving Average, it is still considered to be in a bear market phase.

If the stock does not rally through the Optimized Moving Average at this time, I would expect a retest of the early March lows around the 425-407 price range. A successful retest could be in store for the stock so I’d start accumulating the stock on any move close to that price area.

MARKET OBSERVATIONS FOR MARCH 17, 2013: The stock market hit consecutive new highs for 10 trading sessions. That remarkable string was broken on Friday with the market’s modest decline. While the general market is certainly overbought by many measures, it is not as over-loved as you might expect. Since investor sentiment is still largely neutral, the market may correct in the short-term and then present investors with another chance to buy for the next leg up. That appears to be a less risky approach to making money than trying to short this relentlessly bullish market.

Key market indicators show the following:

• Investor Sentiment – short-term neutral & long-term moderately over-loved
• NYSE Breadth Oscillator – Ultimate Indicator reading of 51 – neutral
• Nasdaq Breadth Oscillator – Ultimate Indicator reading of 55 – neutral
• Risk On/Risk Off Indicator -Ultimate Indicator reading of 64 – near a sell signal

Many key breadth indicators  are showing neutral readings even after this persistent advance. If the market continues to march upwards in the coming week, it may present an opportunity to buy the Long-Term Treasury Bond ETF (TLT). This is one of the best ways to participate with less risk in a downward market as opposed to going short or buying inverse Exchange-Traded Funds.

If the market heads down next week, it may set up a short term buying opportunity for a continuation of this advancing market. So be ready to move in either direction as the market reveals its next opportunity for traders and investors.

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THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE MARCH 9, 2013

The Money Flow Indicator hit 5.13 during this past week. Both the RSI and ULT Indicators made brief buy signals shortly afterwards. Thus, this triple buy signal made it possible to take initial positions in this undervalued, oversold, and unpopular high-quality stock. (Click here for the chart for Apple)

But the price action since this triple buy signal has been more of a “dead cat bounce.” Perhaps, the stock is not yet ready to advance. My guess is that the stock of Apple will experience a lot of selling as the end of the quarter approaches. Many money managers with large positions in the stock will not want this on their books at the end of quarter. The stock of Apple will most likely be ready to advance after this selling period is over.

On the trading side, it seems to me that the stock needs one more thrust downward in order to shake out all of the weak hands. It may take a move to the 410-400 price area in order for that to happen. It could do so intraday so a limit buy order may be required in order to capitalize on such a move.

MARKET OBSERVATIONS FOR MARCH 9, 2013: The stock market hit consecutive new highs during the last 6 trading sessions. This is a classic example of letting a powerful move run its course and resisting the urge to short. The upside momentum has probably peaked at this time, but after a short correction, I’d expect at least one more overshoot rally to a new closing Dow high. In order for that scenario to pan out, we first need a sharp and broad correction lasting a week to 10 days. Then one final narrow advance up to a new high which is not confirmed by breadth and other broad-based averages.

Key market indicators show the following:

• Investor Sentiment – is surprisingly both short-term & long-term neutral
• NYSE Breadth Oscillator – Ultimate Indicator reading of 75 – a clear sell signal
• Nasdaq Breadth Oscillator – Ultimate Indicator reading of 78 – also a sell signal
• Risk On/Risk Off Indicator -Ultimate Indicator reading of 68 – 2 points away from a sell

With many key breadth indicators at or near sell signal levels, I would be looking for a correction to begin on Monday. This will be the first leg down with most likely a retest of Friday’s highs in one to two weeks. Since the “Wall Street Craps Method” discourages both leverage and shorting the market, the best thing to do is remain on the sidelines and let the market correct. Then look for either a short-term upside opportunity in the general market or a trade in the Long Treasury Bond ETF (TLT).

Remember that the sentiment indicators show that market participants are still neutral. This is not a sign of a major top. So a correction here would give nimble traders and investors a chance to ride this market up when the rally resumes.

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THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE MARCH 2, 2013

The Money Flow Indicator hit 13.66 with Friday’s close. This is a clear buy signal and the first chance to take a position in Apple. Both the RSI and ULT Indicators are in the low 30s which are also very close to flashing buy signals on any further weakness. Now is the time to gradually wade into this undervalued, oversold, and under-loved high-quality stock!

Note: Monday March 4th or Tuesday March 5th could experience a sharp spike down (possibly towards 420-407) to buy into. Don’t be afraid to pull the trigger. It will be difficult to get the perfect price, but now is an optimal time. Remember, there is also the risk of missing out on a good opportunity!  (Click here for the chart for Apple)

THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE MARCH 1, 2013: 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 482 and dropping rapidly.

With today’s AAPL price of 434, the spread between the Optimal Moving Average and current price is 48 points. Until the price of AAPL breaks convincingly above the Optimal Moving Average with increased volume, expect the bear market in AAPL to continue….much to the chagrin of those who purchased the stock during the height of its popularity last year.

Until the weaker hands give up on the stock, the bear market in AAPL should continue. The first clue would be a clear oversold buy signal in the “Money Flow Indicator” which has called each of the last three rally in AAPL.

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Right now, the Money Flow Indicator is at 23.51 which is in my estimation about one to three days away from flashing a buy signal. With AAPL’s current level of investor apathy, it would not be surprising to see a bottom in the next few days. Manage your chips wisely by taking a small pilot position in AAPL when the Money Flow Indicator reads below 30.

Update March 2: The Money Flow Indicator hit 13.66 with Friday’s close. This is a clear buy signal and the first chance to take a position in Apple. Both the RSI and ULT Indicators are in the low 30s which are also very close to flashing buy signals on any further weakness. Now is the time to gradually wade into this undervalued, oversold, and under-loved high-quality stock!

MARKET OBSERVATIONS FOR FEBRUARY 25, 2013: The stock market hit a new high last Tuesday before embarking on a sharp decline. Friday’s advance recovered most of the previous two-day decline. The market is in the unique position to either test last Tuesday high or test last Thursday low. Don’t be surprised if the market follows a common pattern of heading down towards the end of the month (and rallying in the beginning).

Key market indicators show the following:

• Summation Index – has been in a month-long consolidation pattern & broke to the downside during last week
• Investor Sentiment – is short-term neutral & long-term slightly negative
• Fear & Greed Index – is at 76 which is in “Extreme Greed” territory but has more room to the upside
• NYSE Breadth Oscillator – Ultimate Indicator reading of 41, not far from a buy signal
• Nasdaq Breadth Oscillator – Ultimate Indicator reading of 40, not far from a buy signal
• Risk On/Risk Off Indicator -Ultimate Indicator reading of 53 which is neutral

With many key breadth indicators near buy signal levels, I would welcome a return to last Thursday’s low with a chance to go long towards an intermediate top in March.

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THE APPLE BEAR MARKET OPTIMIZED MOVING AVERAGE UPDATE FEBRUARY 19, 2013: 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 498 and dropping rapidly.

With today’s AAPL price of 460, the spread between the Optimal Moving Average and current price is 38 points. Until the price of AAPL breaks convincingly above the Optimal Moving Average with increased volume, expect the bear market in AAPL to continue….much to the chagrin of those who purchased the stock during the height of its popularity last year.

Until the weaker hands give up on the stock, the bear market in AAPL should continue. The first clue would be a clear oversold buy signal in the “Money Flow Indicator” which has called each of the last three rally in AAPL.

Key Apple indicators show the following:

• Relative Strength Indicator: “42” reading & is more than a week from a buy signal
• Ultimate Indicator: “42” reading and is also more than a week away from a buy signal
• Money Flow Indicator: “55” reading which is far from being a buy signal under 20

Until the “Apple Bear Market Optimized Moving Average” is broken to the upside, the trend is down for this popular stock. And until the Money Flow Indicator gets near 20, it still hasn’t gone enough to an extreme in this most accurate forecasting timer for buying Apple.

Special Note: It looks like a retest of the lows is about to happen. I would look to accumulate AAPL on this retest as it has a good chance of being successful. I would expect a negative “cover story” to cause the weak hands to capitulate on this retest. It may pay to be a day early on your buying of these pilot positions. AAPL has a habit of making huge jumps to the upside when bottoms are reached. Being a day or two late may cost you 30-50 points!