Nov 28, 2012

Are We In A Dead Cat Rally?




Based on the "Most investors sell at the bottom" chart here is upgraded analysis. There is something in common for the market corrections within the last two years. Repeating pattern shows that after initial sell-off there is a relief rally. This so called "Dead cat" rally usually touches the strong resistance of 50 day MA followed by another drop. Current pattern obviously suggests we are in rally mode, however there is high probability for further drop if 50 MA appears to be the turning corner again. 

Dow Jones Corrections
Dow Jones Corrections
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Nov 26, 2012

NASDAQ Summer Consolidation Close To An End



In post “NASDAQ target reached! Now what?” published May 4th we pointed out the beginning of the summer consolidation mode for the technological index. Indicative index range was 2400-2787. Five months later the pattern appeared to be correct with range pretty much in line with levels set (2500-2874).

NASDAQ to turn bullish
NASDAQ to turn bullish

Currently we are at the eve of a new bull phase for NASDAQ. If we assume that the bottom is 2400 and consider previous two patterns that appeared 2010 and 2011 next upturn for the tech index should add some 30% to the market value by spring 2013 (see Next Nasdaq Target, Published Aug 24th ). 

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Nov 22, 2012

Investment Strategy Generating Over 25% Annually



Using trading strategy is always good attitude in order to eliminate emotional trading which can harm your portfolio. The CapitalHubs High Yield strategy has the following characteristics: 

  • In the strategy is used leveraged S&P EFT - SSO (ProShares Ultra S&P500). Trading the broader market ensures high diversification.
  • Underlying leverage boosts the profitability of the strategy since the last is based on short term holding period, trading on signals generated in oversold markets and target return of every trade at 15%.
  • This strategy ensures time limited market exposure and hence market risk, higher probability for winning trades and heightened profitability
  • Ste strategy does not use stops, ensuring that the target is always hit on profit and avoiding loss capitalization during the volatile recovery

Strategy back test for a period of 4 years, starting the beginning of 2009 shows following outcomes: 

  • Return on capital invested over the period (4y): 93.23%
  • Sharpe ratio: 2.74
  • Win/Loss ratio: 100%
  • Number of signals: 6
  • Risk: High (max day drown: 37%),
  • Market exposure (in days) 95 out of 1460 (4y) or 6.5%

Compared to traditional buy and hold strategy the yield over the period is pretty much the same, however the exposure to the market (the market risk) is considerably lower (6.5%) compared to the 100% of the time invested in classical buy and hold. In essence, this investment style gives buy on dips generated signals directly to your mail, low market exposure (time related) and 100% winning trades. 

Try CapitalHubs High Yield strategy*

Here is visualization of the mentioned investment style:
 
*Because of a system limit of 10% per position multiply outcomes (max day drown) by 10 to get the result of fully invested portfolio of $100 000. As SSO represents the broad market (S&P500) the fully invested portfolio is considered to be diversified.

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Most Investors Sell At The Bottom



Many profound investors often state that you should not follow the investment public as collective opinion is mostly driven by fear and greed. Closer look at the Dow Jones ETF (DIA) gives the evidence that one should follow his own strategy and distance from the public mood no matter if there is joy or blood on the (Wall) street. 

One of the most remarkable thoughts of Benjamin Graham on the issue: ”Most of the time stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble… to give way to hope, fear and greed.”

Mentioned by the famous investor behavior could be clearly seen on the Dow Jones 3 year chart. Examination of the last 4 corrections during past 3 years consistently shows the same outcome. Dow fluctuates around its long term trend – 200 day moving average which it is not surprise for anyone. However all corrections have one thing in common. That is high volume sell-offs. During the correction period most severe one day declines occur with extremely large volumes. That fact confirms the finding: most investors sell at the bottom. The reasons behind investor decision liquidating positions with loss are several but some of them include sharp shift in the investor mood led by panic, sharp rise in risk aversion, large funds lowering exposure. At the bottom is capital preservation. The factors are complex but the result is one – sell-off. 

The evidence that most investors sell at the bottom
The evidence that most investors sell at the bottom


As seen on the chart after the initial fall usually there is dead cat rally followed by subsequent drop both combined with declining volumes. Here investors confidence is damaged and most decide to stay away of the turbulent volatile markets. 

Actually that is the right time to enter – inversely to the public opinion as wise investors suggest. Combination of the sharp sell-off with extremely high volume could be used as a buy signal. The history shows that the best time to enter is some 5 to 10 days after the panic day. Employing the 200 day moving average could additionally give you margin of safety if sell-off occurs under that level. 

Still no one can be sure where the bottom is. There is possibility of investment going under water but with patience and discipline the outperforming yield will come. Following the suggested patterns would let you buy cheap oversold assets which ultimately will boost your profitability. The bottom line in applying this or any other strategy is that simply have to be firm and don’t let market panic obsess you and your decision making. Quoting Graham again: “Even the intelligent investor is likely to need considerable willpower to keep from following the crowd.” i.e. discipline is the key for success. Don’t let others influence your decisions or strategy. Be THE intelligent investor!

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Oct 29, 2012

Hurricane Sandy Impact



Natural disasters have always led to massive economic damages. Here are some estimations mentioned on Bloomberg Television’s "Bloomberg Surveillance". Reading the numbers most damaging hurricane up to date was Katrina with close to $106 bln. costs. The Sandy's costs estimated to be between $15-18 bln for the New York Area. 

Costliest US Hurricanes
Costliest US Hurricanes
Potential Losses From Sandy
Potential Losses From Sandy
Source: Bloomberg TV
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Oct 4, 2012

The predicting power of transportation sector (DJIA vs DJT)



The transportation sector has been widely used as leading indicator for the current economic activity. Last few trading sessions of Dow Jones Transportation Index (DJT) and Dow Jones Industrial average (DJIA) give interesting signs.

The fact that DJTransportation sector leads DJIA could be used to predict the market ups and downs. As chart shows they are strongly correlated, however there is an interesting relation to be examined – the divergence between both.

Two times over last two years divergence between transports and Dow industrials has been detected. Every time mentioned pattern appeared the market continued its rally despite Transportation companies drop. If you follow the traditional conception you should consider that divergence as a signal for weak economic activity and should underweight the industrials holdings. However, as chart shows, the divergence periods have been followed by robust rallies (and then sharp declines). This pattern was repeated in January 2011, in February 2012. Last week’s drop of more than 5% for Dow Jones Transportation Index vs. flat performance for Dow there is high probably we are witnessing the same pattern again.

Dow Jones vs. DJ Transportation - divergence
Dow Jones vs. DJ Transportation - divergence
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Oct 3, 2012

Google getting closer to turning point (Seasonal analysis updated)



Just in line with the seasonal pattern GOOG has gained some 30% (after double bottom this summer). As seen on the chart last three bull markets started after summer bottoms and we are witnessing this model repeated again in 2012. 

The seasonal pattern suggests that Google should form peak around end of December or early January and then should be followed by correction until next summer. Considering the fact that there are more than 3 months until year end there is room for more gains and probably the resistance line of the parallel channel could be broken. The support area for corrective move usually is some 10-15% under the 200 day moving average, $620-640.

Google close to peak?
Google close to peak?

Google seasonal trading posted Feb 16th: Google Seasonal Trading
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Sep 10, 2012

Next Gold Target $2300



In this post I intend to use Eliot Wave Theory, although a bit modified, combined with Fibonacci golden ratio. This kind of combination applied to gold trend gives interesting outcome. Basis for this analysis is the method widely described in Forecasting page. Here I will conduct projection of the waves and set targets. 

First, and most important thing, is determining the first wave and its retracement (correction) – wave 2. This is the foundation of the construction. Considering the fact that wave 3 is the most bullish and longer historical observation shows that its length is around 2.618x the height of wave 1. As seen on the chart the target set by this method in 2009, for example could have given target of $1804 before new correction (wave 4) occurs. The actual peak was $1922. 

Where are we now? Currently the gold is finishing its consolidating correction with Friday’s breakout of the triangle. If the bull attack proves to be successful, as it seems to date, that could mean that we are entering the last wave 5. What level the wave 5 target is. Using the same method for target projection as with wave 1 we could find that level. However here the strength of the last move is lower than the previous bull phase thus target is determined by 1.681x the wave 3 height. Started at $681 and finished at $1922 wave 3 height is $1241. This difference multiplied by 1.618 gives $2008 gain from the basis ($681), hence the target level is $2689. 

Next Gold Target
Next Gold Target
Whether this level is reachable depends on many unforeseen events. However keeping in mind global push for another round of economic stimulus global economy could be flooded with money, which means only one for the precious metals – rise.

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Sep 4, 2012

Gold in new bull trend



After trading in a triangle consolidation for the last year gold finaly broke the figure in friday. Recent speculations fueled by possibility for another quantitative easing has kept price of gold rising for the last month. If there is actual confirmation for another stimulus shot than there is high possibility for strong gold rally similar to 2009-2011 one.

Wide spread technical pattern confirms that successful breakout of the triangle leads to move with height just as triangle height. The implication from technical point of view is that the next target could be $2000. The target level is formed as projection of the triangle height is added to the breakout level. Thus to break level of $1662 we could see some $461 gain.

The risk for mentioned target is disappointment of eventual QE3 postpone or even rejection, strong dollar and low inflation economic environment.

Next gold target
Next gold target


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Aug 24, 2012

Next NASDAQ target




Seasonally repeated NASDAQ100 patterns proved to generate useful buy and sell signals for the last three years. This post is continuation and update of the “NASDAQ target reached! Now what?” post. 

On the chart I have used simple analysis which follows the strength of the recent bull markets and the range of the bear ones as a base for building projection for the next NASDAQ target. As chart shows for the last three years there is clear seasonal relationship – autumn spring bull period followed by summer corrective zig-zag. 

NASDAQ cyclical pattern
NASDAQ cyclical pattern
Currently we are at the end of the summer and using the logic of the previous two cycles we should enter new bull phase of the cycle. The foundation of the projection is the summer bottom of 2439 registered on 1st of June. Adding the average gain for the previous two cycles (around 750 points) gives a target level of 3200. This target seems quite optimistic. Probably it is, however, one should consider the relatively big share of Apple in the index compared to the other companies. As a big influencer of the index if the target range of 800-900 for the iPhone maker prove to be true than 3200 for NASDAQ could be completely reasonable target.

Still unclear is whether the consolidation has finished yet. It is possible to see moderate pullback before the market rally unfolds. Again Apple could be major driver as iPhone 5 release is knocking on the door and as history proved new product announcements has been bearish for the stock, at least in the short run (see “The correlation between Apple product launch and stock price”).

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Gold vs. stock market: Can we use gold to preserve our assets from market crash?



Gold has always been considered to be one of the few hard assets which successfully store value through the time. Proof of that fact is the long term performance of the precious metal. 

Probably most of the investors have faced the question “Can we use gold to preserve our assets from market crash?” In that regard is observation of the 6 year performance chart of gold, represented by (GLD), and S&P500 index (SPX) which lead to the following conclusions:
  • For the last three years Gold (GLD) followed SPY corrections with certain lag
  • Market corrections tend to be more severe compared to gold corrections
  • For the last 6 years GLD outperformed SPY with 153% return vs. 10% for the index

S&P500 corrections vs. Gold corrections
S&P500 vs. Gold corrections
*Note that the chart is in log scale.

As numbers show all of the registered corrections for the period tend to be more severe for SPY compared to GLD. The reason for that could be found in the statute of the gold as a safe heaven. Just imagine where you could put your money in time when every asset price drops. The logical answer is hard assets with good historical price performance. Since in long term GLD clearly outperforms SPY it is rational that after the initial selloff most of the investors jump back in the gold and prevent its price form huge drop.  This fact again is supported by the perception of gold as save heaven asset good to be invested in long run.     

The lag

Most recent bear market which triggered recent economic turmoil started at the end of 2007. During that year when the broad market (SPY) started falling still the gold continued its rise until March 2008. That is 4 months lag. Consequent market corrections in 2010 and in 2011 had the same occurrence – the gold made its peak soon after the market hit the roof. Thus selling gold in the middle of the market correction sounds reasonable.

The correlation

There is wide known that the gold has negative correlation with the dollar and the positive with the global markets. However note that those correlations are not perfect i.e. not always for example as dollar falls the gold appreciates with the same margin. In its “Gold investment statistics commentary” the World Gold Council stated:

Looking back to Q1 2012, gold had a higher correlation to global equities, emerging markets and commodities than the long-run average; however, this correlation was not indicative of a direct economic relationship.

Gold correlation to global assets
Gold correlation to global assets
Source: gold.org

The correlation coefficient changes over time influenced by numerous factors but the relation is the same – positive with the markets and negative with the dollar. What does it means for the investor? Simply that one can use the gold as dollar hedge while using it as a market hedge is a bit tricky. That is because, as observation results showed, in short term you cannot avoid drop in the price of gold when everything is melting down, however in long term compared with the stock’s performance the winner is the metal. Thus you can boost your performance and add value if you have wide gold investment horizon.

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Aug 20, 2012

The correlation between Apple product launch and stock price



The highly anticipated iPhone 5 release has pumped Apple price to new records as investors jump in the strongly desired stock. Still, the release date of the company’s expected to be-most profitable and famous product, is not yet clear, thus additionally fueling speculations.

For investors, it is logical that the price behaves in such a way during a pre-product release period, as everyone is full of expectations and trilled about the new features. It is interesting to see, however, how the price performs post product release date. In Chart 1, I have labeled the exact dates of the product releases of iPhone (started 2007) and iPad (started 2010). Please note that Chart 1 price scale is logarithmic.

There are some common price patterns repeated almost around every product release date:
  • The price peaks few days before release date and falls one to three months afterwards 
  • The correction after the release date is between 9 and 16% 
  • The correction is usually zig-zag shaped 

Chart 1. Apple product release dates and stock price move
As seen from the Chart 1, with the first iPhone released on 29 Jun 2007, the stock price traded in consolidation followed by a sharp rally. All following iPhone releases tend to show the same consolidating pattern in the period surrounding the release. The iPhone 3GS (released 19 Jun 2009), iPhone 4 (released 24 June 2010) and iPhone 4S (released 14 Oct 2011), have shown price drop post release days. After the iPhone 4 release, the stock lost 10% in a week, while the iPhone 4S release pushed the price with 14% in a month (see Chart 2). The optimistic thing here is that both corrections consequently triggered extremely strong bull market in which ironically no product release was announced.

Examining the iPad release date, patterns show slightly different picture. One should note that larger share of Apple’s earnings (48%) and income comes from iPhone sales thus the impact of the phone release is higher than that of the tablet. The announcement of the first and third iPad proved to be bullish for the stock, while the second was followed by correction, which again triggered major rally for the stock. On Chart 2 (daily bars) you can follow the picture in detail.

Chart 2. Apple product releases are followed by correction
Based on the observation findings and combining them with the seasonal patterns of the Apple stock (Apple seasonal patterns with strong predictability power) we would expect the price will continue rising until the iPhone 5 release date (expected mid September). This is to be followed by a correction in the following month. Based on the experience from previous corrections, the pull back should not be deeper than 16%. The support level is determined by the 200 day moving average, which projected to that date gives $565. Thus the area falling between 590 and 565 could present a good buying opportunity.

It is clear that no one can predict the future, however, there is a strong logic in stock price moves based on a product release cycle and on seasonal basis. This could be used during the process of an investor decision making. Several times, Apple investors have followed a “buy the rumor sell the fact” strategy. Whether they will repeat it again we are about to see in coming months.

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Aug 16, 2012

The connection between stock market and US president cycle



The connection between US president cycle and stock market cycle has always been a debated issue. With US elections approaching, the topic is receiving even more attention. In the paper entitled “Presidential Elections and Stock Market Cycles” by Marshall Nickles, EDD thoroughly explains the evidence for such a connection. This is done by analyzing15 stock market cycles (from April 1942 to October 2002) and presidential elections for the same period. Here, I intend to use that methodology to review the last two stock market cycles and find out how they fit to the broader picture.

Briefly stated findings of Mr. Nickles research show that:
  • Average bull market duration for the mentioned period was 3.08 years
  • The average bear market duration was 0.94 years
  • The bull/bear market duration depend on the measures undertaken from officials to tackle the crisis and stimulate growth, thus deviation of the average number exists
  • There is significant probability market trough to occur in the second year of the presidential term  (12 out of 16 terms for the observed period)
  • There was not major market correction during the election years for all election years within the observed period

Based on the findings, the author suggests investment strategy buying on 1st of Oct of the second year of the presidential term and selling 31th of December of the fourth (the election year). According to the calculations this strategy could gain annualized return of 9% for observed 60 years.

Those findings seem quite convincing and one might decide to build his investment strategy based on them. Let us examine the latest two cycles from 2000 to date and apply mentioned strategy for this period.

The chart gives us information about the relationship between presidential and stock market (S&P500) cycles for the suggested period. The index is in log scale.

S&P500 and presidential elections
S&P500 and presidential elections


Last two bull cycles (2002-2007 and 2009- to date) tend to be more extended than the average mentioned in the paper. This could be explained with the magnitude of the crash proceeding each of the bull phases. As the chart shows, during both years- 2000 and 2008, downturns were severe. Average bear markets for the period 1940-2002 tend to last one year, the recent two are exceptions from that rule and are  longer. Dot com bubble, for example, busted in 25 months while recent mortgage burst lasted 16 months.

Take a look at the last two market cycles – the Dotcom bubble (2000) and Housing bubble (2008). What they have in common with presidential election cycle is that election year coincided with severe bear market – the exact burst of the bubble. Moreover, the duration of the last two market cycles was longer than the average for all previous cycles between 1944 and 2000. Dot com boom and burst lasted 99 months (8.25 years) while housing bubble and consequent melt down lasted 77 months (6.4 years) compared to 4 year average. As the author noted, cycle duration depends on unforeseen events such as monetary or government stimulus actions, which influence the cycles, indicating that those events have intensified recently.

The strategy

In the paper, the author suggested interesting investment strategy. Buy on the second year of the presidential term and sell on 31 Dec on the next election year. As calculations showed, this kind of investing could have preserved you from most severe bear markets and brought to you annualized return for the period 1952-2000 of 9.3%. Sounds good, doesn’t it? However, if you have followed it you would have missed some of the great bull market runs, like 2002-2007. If you have waited two years after 2004 elections and entered the market in 2006, you would have missed 16% S&P500 rally, which is significant. By applying this strategy for the 2004-2008 president cycle, i.e. buy in Oct 2006 and sell 31 Dec 2008 you would have counted with a  loss of almost 20% as year 2008 is one of the few presidential years, which ended with loss. Thus, buying in presidential year does not always work, however the probability for stock market gain in the election year is high. Since year 1928, only 4 out of 22 president election years finished with negative gains. The table below shows market returns for each election year. Data below are taken from  Dimensional Funds Matrix Book 2011 (“Presidential Elections and Stock Market Cycles” Marshall Nickles, EDD)

S&P 500 Stock Market Returns During Election Years

Year      Return   Candidates
1928      43.6%     Hoover vs. Smith
1932      -8.2%      Roosevelt vs. Hoover
1936      33.9%     Roosevelt vs. Landon
1940      -9.8%      Roosevelt vs. Willkie
1944      19.7%     Roosevelt vs. Dewey
1948        5.5%     Truman vs. Dewey
1952      18.4%     Eisenhower vs. Stevenson
1956        6.6%     Eisenhower vs. Stevenson
1960       0.5%      Kennedy vs. Nixon
1964      16.5%     Johnson vs. Goldwater
1968      11.1%     Nixon vs. Humphrey
1972      19.0%     Nixon vs. McGovern
1976      23.8%     Carter vs. Ford
1980      32.4%     Reagan vs. Carter
1984        6.3%     Reagan vs. Mondale
1988      16.8%     Bush vs. Dukakis
1992        7.6%     Clinton vs. Bush
1996      23.0%     Clinton vs. Dole
2000      -9.1%      Bush vs. Gore
2004      10.9%     Bush vs. Kerry
2008      -37.0%   Obama vs. McCain
2012      ?             Obama vs. ?

How to avoid presidential election year with negative stock market return?

Presidential election cycles alone do not give us the necessary information for taking investment decision. Combining the stock market cycle with the presidential cycle gives us the ability to time the market. It is a statistical fact that it is more likely to see market trough during the second or first year of presidential term. Keeping in mind that average duration of a bull cycle is 3 years, we could expect that if presidential election comes during the bull market or first two years of the market cycle than there is no point of waiting two years to enter the market as expected correction should be mild. If election years, however, coincide with the third, fourth year of the bull phase or even with bear stock market then you should follow the suggested strategy.

The 2012 elections and the stock market

Currently we are in the fourth year of the president cycle, the election year, and in the fourth year of the bull cycle (started with the 2009- low). The logic of the cycle sequence suggests that applying the presidential year cycle strategy we could wait with investments until mid presidential term - Oct 2014. However, there are presidential elections years followed by strong bull market. Are we in a such one? Considering the fact that currently we are in the 42th month (3.5 year) of the bull market, we have to be cautious. Markets might be close to the bull cycle end as the average one from 1944-2004 is 3.08 years and 2012 is the fourth year of rising stock prices. 

Many state that history does not repeat itself and it is impossible to predict future events. However, it is possible to time the market cycles, at least to some extent, and with relative accuracy. No one can predict the future but knowing the big picture and major trend of the phase of the cycle could save you some financial headaches. Even for the critics it is obvious that repeated patterns do exist. Just look at the chart. Whether you agree or disagree with the cyclical relations it is up to you, however it is always better to know some important repeating patterns and to be ready to use them in your favor.

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Jul 26, 2012

Apple seasonal patterns with strong predictability power



Following post analyses, the seasonal share move in Apple stock and tries to extract repeating and often occurring relationships between the season and the share price trend.

Seasonality in capital markets is very common. Apple proved to follow strict seasonal patterns. Daily charts from mid-2009 indicate that there are two repeating patterns every year since 2009. The first is a bullish market which usually starts during autumn (September-November) and lasts until spring (April). The second is a consolidation period, which occurs in summer months. This relationship has been extremely strong for the observed period. 

Bull periods are strong with gain above 50%. The first one started with the broad bull market rally, which for Apple means 234% gain. The second rally, between 2010-2011, started in September and added 55% to the company market cap. Autumn 2011-Spring 2012 rally started end of November 2011 and added 75% return. 

During the summer months, the AAPL stock corrects, however that pullback is not severe and it resembles horizontal consolidation, same as the one of the 2010 summer. Summer 2011 was slightly different as the bull market ended earlier (February), thus it was longer, followed by a sharp rise in Jun-July and another horizontal consolidation until November. 

Where are we now?

The last bull market started in November 2011 and continued until April 2012. Since then, we are in a period of consolidation/correction. If above mentioned patterns are to be repeated again, we could expect current correction end in autumn 2012 (Sep-Nov period). This means start of new bull market with entry point $500-$530, determined by the parallel channel support line and 200 day moving average cross point. History has proved that whenever AAPL price touches the 200 day MA the buy signal is indicated. If we assume 50% gain, the target price is $750.

Note: The char is in log scale.
Apple price patterns
Apple price patterns

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Jul 25, 2012

Apple in buy on dips mode



As practice proved it it’s always been good strategy to buy quality blue chip companies on dip. Now is the moment to consider Apple as recent share drop is opportunity to jump in. Falling iPhone sales seem reasonable before debut of the new iPhone5 as customers wait to get the new product. This should not be a constant threat since Apple is a company continuously providing product diversification which protects its leading status. The new iPhone5, the iPad mini and the rumored Apple TV are expected to further strengthen its revenue growth. 

According to the technical analysis the support range appears to be $520-540. That is the area close to triangle support line and projected 200 day moving average, both strong support levels. It is questionable whether investors would let AAPL stock touch those levels thus price under 560 is acceptable. The short term target is $642, the April peak.

Apple price consolidation
Apple price consolidation

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Jul 23, 2012

S&P500 downtrend confirmation



Summer rally proved to be short lived and without volume support as most of the public is out for a vacation. However the markets don’t go to summer holidays and we are witnessing that consequence at the moment.

Recent rally was undermined by numerous factors. First, disappointing Chinese growth data sent markets south, second newly refreshed Euro skepticism over debt problems resolution have led to brief selloffs.

On the technical side the S&P500 index (SPX on the chart) is showing really disturbing signals lately. First to mention is the fact that we got fresh new lower highs, which suggests negative trend formation. Another worrying fact is the divergence between the index and the histogram of the moving average convergence divergence (MACD) indicator. This point to trend reversal and, as history shows, it is seldom wrong.

How deep could markets drop?

Based on the previous bottom registered at beginning of June and latest peaks we have built parallel channel pointing the bear move. Using 2011 bottoms as reference the support range between 1200 and 1240 is the target area, some 6 to 10% drop. However if there is strong monetary or political sign for support the markets could find ground and rally briefly. For trend reversal we would need more persistent policy action.

Based on current unfavorable macro environment, which suggests sluggish growth worldwide, and mentioned technical indicators we could say that new bear market is knocking on the door.

S&P downtrend confirmation
S&P downtrend confirmation
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Silver still in triangle consolidation



Breakthrough of the parallel channel confirmed the bearish trend of the silver. The precious metal tried to reverse last two months but growing concern over China (demand) has pressured the price further. Still SLV is trading within the long term triangle consolidation. If we see breakthrough of the triangle resistance line (another bearish sign) levels of $22.40 and $19 could be seen. If, however, markets reverse and risk appetite returns to investors mind a possible breakthrough above triangle resistance at $29 (which will eventually coincide with 200 MA) could drive the price 26% higher to $38.

Silver trading in triangle consolidation
Silver trading in triangle consolidation
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Jul 19, 2012

Google on its way for reaching the target range $520-540



In post published five months ago I set target for Google considering the seasonal deviations and repeating patterns of the stock. Now the analysis proved to be consistent and Google reached $557 in late June. Still the target stays intact, however if broad market rally occurs we could easily see the tech giant trading above its 200 moving average ($602).

Google seasonal pattern
Google seasonal pattern
Google seasonal trading posted Feb 16th: Google Seasonal Trading
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Qualcomm approaching reversal point (updated)



In post published three months ago named Qualcomm in seasonal share price pattern I have pointed out the repeating seasonal pattern in this stock. Since then the share fell from $62 at the end of April to the bottom of $52.9 in mid July. Probably the correction has not finished yet however there are signs that we are approaching the end of summer bear market for the stock as second half of the year
 
Qualcomm close to turning point
Qualcomm close to turning point
More on seasonal trading: Google Seasonal Trading
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