WALL STREET CRAPS OBSERVATIONS FOR MAY 13, 2013
MARKET OBSERVATIONS FOR May 13, 2013: The stock market reached new highs during this past week which were largely confirmed by other major indicators. But it wasn’t necessarily overwhelming strength across the board. This could be setting up the “head” of a potential “head and shoulders” top. That said, it implies that the topping process has much more time to chew up before getting anywhere near a full-blown declining phase. I’d look instead for the market to correct into another buying opportunity for a ride up into an overbought condition as it forms its right shoulder.
Key market indicators show the following:
- Investor Sentiment – still neutral both short and long term but with a small move towards overbought in the long term model – a key point of note!
- NYSE Breadth Oscillator – Ultimate Indicator reading of 62 – neutral
- Nasdaq Breadth Oscillator – Ultimate Indicator reading of 70 – overbought sell!
- Risk On/Risk Off Indicator – Ultimate Indicator reading of 74 – overbought sell!
For now, my advice is to remain on the sidelines and let the market set itself up for its next big move. It could be an oversold condition on the next decline which would set up a short but profitable ride up into its next overbought condition. If we get a few more closing highs that is not confirmed by strength, we could reach a point of exhaustion to the upside.
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As for Apple (AAPL), it’s the same advice as last week. The stock has finally broken above its Bear Market Optimized 50-Day Moving Average. After hitting its price pivot points in the 417-392 range, the stock of Apple rallied enough to end its Bear Market. But it doesn’t automatically mean that the stock will go into an instant bull market. Instead, the stock of Apple could remain in a neutral position while it “backs and fills” in order to form a stronger base for a more sustainable rally. I’d be looking to gradually accumulate the stock on a retracement into the 423-400 price range.