Yet, investors need to be mindful of 1130 on the S&P 500. That continues to be the line in the sand from a technical standpoint. If we break that point on convincing volume, it suggests an intermediate move up to 1250 on the S&P 500. The recent August sell-off was the weakest of the down-legs since the April correction, and this new move up has been the most vigorous of up-legs. This tells us that the overall April to August downtrend is starting to weaken quite substantially.
After the S&P 500 triple bottomed at 1040 last Monday, I changed my stance on the equity market as whole. It’s no secret that I’ve been quite bearish on equities since late April – but based on this recent move up and based on the trading action at 1040 on the S&P, I’ve become intermediate term bullish on the market. I think pull-backs should be bought and any weakness in Apple is a gift.
Here’s how I see things playing out over the intermediate term. The market will probably pull-back a little more from here. While we might move higher in the short term, the market is due for a minor pull-back. Maybe a few hundred dow points. That dip, should be bought. After that pull-back, the market will probably rally to 1130 on the S&P 500. At that point, Apple will probably have rallied to $270 to $280.