Take a second bite out of Apple

samsonOn Monday I said that the market was walking a tight rope and could go either way. Once again, it appeared the market heard me and made its mind up, the S+P 500 pushing decisively above 1670, taking the Dow Jones with it. Now both major indexes are in bullish territory once again. But only just.

So where do we go from here?

From a big picture point of view, the market needs to better its recent highs: 15658 on the Dow and 1709 on the S+P. If it can achieve that, we will trade the bullish side. BUT, if it fails to do that soon and then cuts below the recent lows of 14760 and 1627 respectively, then we will trade the bearish side in a BIG way as this would indicate a bearish ‘head and shoulders’ pattern:
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As my well-established straight blue line shows, the line in the sand is drawn at 14800, and the Dow must stay above it for the bullish case to remain intact. Below that and a great deal of money could be made on the downside.

Markets wait with baited breath for the Fed’s meeting next week. Oh, didn’t you get the memo? The Federal Reserve is in charge of the stock market now. Hmmm, I wonder what the Fed’s target is for the S+P next year…

Seriously, that meeting could set things either way and seems to have taken over as the new thing to worry about after Syria.

Meanwhile on the bullish side of things, Apple (AAPL) has made a dramatic pullback to its underlying support:

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A problem with the advance? Or is it just large hedge funds driving the price down so they can get in on the break out they missed?

As long as it holds above $460 this could be a chance to get in on the action you missed a few weeks ago, a second bite at the AAPL.

Best,

Jim.

 

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