Jack Steiman, On Watching Apple & Sentiment (SwingTradeOnline.com)


Will Monday’s sell-off follow through or will it be just another drop of selling that gets bought up by the bulls? Tuesday should shed some light. The bears need a big gap down that does NOT get filled. If they can do that they’re officially in business. Until then it’s just another small-selling episode to unwind overbought conditions on all the short- and mid-term index charts.


One key factor on whether the market rallies or sells off is Apple Inc. (AAPL). If it can clear the 444 gap with some force it will be on breakout and has a shot at moving to 470/475. If AAPL were to do that it would once again put pressure on the bears, as AAPL is very heavily weighted, and thus would carry the Nasdaq higher and likely take the rest of the market up with it.


AAPL touched 445 on Monday, but fell back towards 443 at the close, and thus no break out at this time. However, it didn’t fall very much at all when the Nasdaq fell well off its intraday highs, which is normally a very good sign for a stock for the near-term. The bears will be watching it very closely to be sure, as AAPL on breakout is basically the kiss of death for the bears.


Sentiment is on watch this Wednesday. We will likely be at the red-flag reading of 35% bulls to bears on the spread. When you get to 35% you think about reigning it in a bit.
When you go above that you reign it in more and more with each percentage point up. At 40% you’re looking at big market trouble. Pullbacks off 40% spreads can be severe, far greater than anyone thinks possible at that time. You think about how the market basically always hangs in there, and thus naturally the next (small) pullback will be bought like all the others. Then that stops happening. It doesn’t get bought. The market spirals lower as all the bulls are in and there are none left to buy.


The selling can be as hard as 10% or more. So we watch the figures this week which will likely only get us to the red-flag zone of 35%, but increasingly closer to the out-of- the-market 40% zone. This is the ONLY thing the bulls should be focused on right here.
Nothing else in their world is relevant. So, while things are fine for now, do recognize that trouble is creeping ever closer to the world of the bulls in terms of sentiment. Wednesday’s reading will be more than interesting. For now, some exposure on the long side remains appropriate.



Avi Gilburt, On Market Has Not Yet Topped (ElliottWaveTrader.net)


No matter how you want to look at this market, we still do not have a completed pattern for yellow wave 3. Moreover, we still do not even have confirmed completion to green wave (3). So, for Monday night into Tuesday, as long as 1660ES and 1653ES hold as support, we do not have confirmation that green wave (4) has begun.


But, please do note, as I stated in our member Weekend Analysis, we have hit the 1.618 extension for this move up, which is the most common topping Fib for a 3rd wave. However, with the amount of extensions we have seen over the last month, I am not saying that green (3) has topped until the above mentioned supports are broken. And, even then, we will still likely have one more rally before we see a real intermediate-term top to this market. 


Weekly Wizards



Harry Boxer, On 4 Longs to Watch (The TechTrader.com)


The stock market had a pretty interesting day on Monday. It was kind of sloppy, but a lot of stocks that we follow did well. The solar stocks were very strong. We’re going to stay with the longs for now, so let’s see what’s going on with them.


Ambarella, Inc. (AMBA) has had nice movement. It had a strong move up Nov-Jan, pulled back through Feb, and then moved back up again. The orderly pullback for four weeks in April finished with a breakout day, and then it stair-stepped its way higher. It backed off the March high last week, and then came on again Monday as a breakout day, up 1.55, or 10%, on 3.1 million shares. That’s the biggest day since it went public. Look for this stock to extend if the market rally continues. We could see this stock get to the 21-22 zone fairly soon.


First Solar, Inc. (FSLR), one of our favorite solars, which we put a swing trade on recently, moved up in a 5-wave advance, pulled back, and on Monday, it popped 4.91, or 9.8%, on 11.5 million shares. It reached the top of the channel. The target was 51-52 and it got up to 55.50. In six-short weeks this stock has gone from the 26-7 range and doubled. The key is the resistance line which could lead to more upside. The next target is 60-61, if the market does want to take it even higher.


SolarCity Corporation (SCTY) had a massive move up to the low-to-mid-50 target, up 6.60, or 15%, on 7.3 million shares. It reached the target we put out there on it last week. It wouldn’t be shocking to see this one go up a little higher, but it’s in dire need of a consolidation. It went up four days in the row last time when it made its move up, and got a sharp pullback, so we’ll see what happens here.


YRC Worldwide Inc. (YRCW) did great on Monday. It had an explosive breakaway gap, a move up to resistance, formed a nice little pennant or coil, broke out, stalled for two days, and then popped again on Monday, up 2.87, or 15%, on 10 million shares. This stock is in run-away mode, and with 8.43 short-covering ratio, this could very well spike up into the mid 20′s before it’s over.


Other stocks on Harry’s Charts of the Day are ACADIA Pharmaceuticals Inc. (ACAD), Canadian Solar Inc. (CSIQ), E-Commerce China Dangdang Inc. (DANG), Himax Technologies, Inc. (HIMX), Hutchinson Technology Inc. (HTCH), Neutral Tandem, Inc. (IQNT), JA Solar Holdings Co., Ltd. (JASO), JinkoSolar Holding Co., Ltd. (JKS), LDK Solar Co., Ltd. (LDK), Real Goods Solar, Inc. (RSOL), SunPower Corporation (SPWR), Trina Solar Limited (TSL), Molycorp, Inc. (MCP), and Qihoo 360 Technology (QIHU).



Mike Paulenoff, On Gold Cycle Work Points to Higher Prices (MPTrader.com)


Time to dust off my big cycle work for spot gold, which for me is represented by a 5 1/2-6 month low-to-low trading day periodicity.


This cycle has been reasonably accurate going back to 2001, which means that every 5.5-6 months since the gold bull market began, the price structure has established a tradable if not very significant low.


As fate would have it, May 2, 2013 represented the next optimal date for a cycle low after the prior cycle low occurred on November 12, 2012. Let’s notice that the November 2012 “low” was, in fact, not far from the October 2012 high, which means that the cycle that just ended exhibited a severely left, or bearish, “translation.”


By contrast, the cycle prior to the current (bearish) one exhibited a severely right, or bullish, translation in that prices climbed for the vast majority of the 5.5 to 6-month cycle duration.


All of which brings us to the present, where we see that the April 16, 2013 low at $1321.50 and then the May 20, 2013 low at $1338.05 straddled the May 2, 2013 optimal cycle low date.


Monday’s sharp upside reversal after successfully testing the April low AND within the timeframe for a major cycle low suggests strongly that the decline from the October 2012 high has bottomed.


From a cycle perspective, then, the only question is what characteristics will a new cycle display? While that remains to be seen, we can expect the initial phase of a new cycle to be very supportive of gold prices at the very least and possibly will propel gold considerably higher during the next 8 to 10 weeks as the “lift-off” phase of the cycle progresses towards its mid-point.


Weekly Wizards