So it looks like we may get that pullback that we had been looking for. Ideally I would like to see a full pullback to the 20 day EMA, but if you see a strong reversal and we are close, you may consider grabbing it. A little drawdown won't hurt, and most signs suggest a healthy market until the debt ceiling is near. Around Valentine's Day, we will have to really start to look at that issue. For now, we have a market that barely will pull back, money coming into the system, low VIX:VXV,

The things against us on a technical point are call ro put ratios, low VIX and high stochastics. The market has been working off some of the overbought condition in the form of time rather than price, but some pullback is still in order.
Miguel Nasiff

Hi Brian, do you think about long-term AAPL?

Bryan Gebhart

Hi Miguel,

I would not be thinking about long term holding prior to the debt ceiling. In fact, I am pretty weary on long term holds right now. If you ask most analysts and brokers, they are bullish. In fact Marc Chaikin who created the Chaikin Money Flow oscillator, suggests that too much money has been flowing into the system and we are currently at a level not seen since Sept 2007. We are at the highest bullish sentiments in the QQQ and within 2% in SPY seen in 6 months. We are a fifth year bull, which is known for two things, an average 11% growth, and a potential for failure.

On the case of Aapl, be careful, there are so many better stock charts to get into. Will it bounce short-term, probably, but it still has more downside likely. Acc/dist went from D- to E. It has a failing 56 comp rating. The chart shows weakness. What is cheap can get cheaper, especially when it comes to growth stocks.

If you are going to do it, here is what you need to ask yourself. Has Aapl bottomed, and how do you know? Is it showing a dead cat bounce, or is it real growth. Never invest long term based on a dead cat bounce. Where do you plan on selling it, and how will you know when you get there? Are you looking for it to touch a 70 RSI, a certain price, a combination of those, etc.

In short, play AMZN, GOOG, or something with a generally rising chart. You might get lucky and pick the bottom, but in general it is a bad practice that will eventually burn you.


Leave a Reply.