Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Apple Inc. Reaches July's Target; Dow Hints at Intermediate Trend Change

By

The anticipated intermediate trend change may have begun a few points short of the final target zone.

PrintPRINT
There's a surprising amount of complacency in the market at the moment. Recent sentiment polls indicate that most people feel this is just a run of the mill correction and aren't the least bit worried about it turning into anything serious. That's not a terribly good sign for bulls, since it means the market will, at the very least, probably need to shake them up pretty badly. The "easy" move in trading is almost always the wrong one -- and if it's still easy to buy the dip, it's probably not the right move. It will be the right move when it feels like it's the dumbest thing in the world.

The anticipated intermediate trend change may have begun a hair sooner than I'd have liked to see in a perfect world, but it's simply not possible to hit every target, and the market appears to have fallen about 10 points short of the final target. Nevertheless, I hope I gave adequate warning on August 13, when I wrote:

I believe the downside potential exceeds the upside potential relative to current price levels. While the near term still allows for another wave up to new highs, I would be quite surprised if bears don't win this battle at intermediate degree. Hopefully that helps clarify my current stance, and it represents a material shift of my long-term stance in January. I'm no longer long-term bullish, but am now in "sell the rallies" mode until proven otherwise.

The decline so far is only three waves, so an intermediate trend change hasn't been confirmed. Once we have a full five wave decline, that should be confirmation, and tell us to expect a rally, then another decline of equal or greater length. Despite the non-confirmation, the early signs point to a trend change. The Dow Jones Industrial Average (INDEXDJX:.DJI) has reached the breakdown target, and I went on record August 13 saying that if the first support zone failed, my expectation was that the second one would be reached, and would fail as well. The first part has come to pass, and the moment of truth is here for the second half of that prognostication.

Of note is the fact that INDU has overlapped the wave (1) high, which rules out a low-degree fourth wave for INDU. The projected path is unchanged from August 13.


Click to enlarge

Bulls need to keep the decline as a three-wave form to continue their intermediate hopes -- so unless they reverse the market immediately, it appears S&P 500 (INDEXSP:.INX) will fail to reach the final target.


Click to enlarge

The Russell 2000 (INDEXRUSSELL:RUT) did reach its target from February, and we can see a three-wave decline here as well.


Click to enlarge



The NYSE Composite (INDEXDJX:NYA) has reached its downside breakdown target -- and has now broken down from a second potential head and shoulders. Bulls need to reclaim the 9500 zone.


Click to enlarge

Apple (NASDAQ:AAPL) has now reached my preferred count target zone from July 8 of 510-530. There's probably more upside left, but I took some profit at 510 (since that's how I trade when my targets are reached) and have choked-up stops on my remaining positions.


Click to enlarge

Below is a chart showing why Apple bulls should avoid complacency here.


Click to enlarge

In conclusion, the market is now three-fifths of the way toward confirming an intermediate trend change. The overlap in INDU has confirmed that this is a higher-degree correction (in other words, it's not part of the last rally), and that does suggest the anticipated intermediate trend change has most likely begun. Trade safe.

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE