Apple headed straight to $300

After bouncing between $230 and $280 since April, this new move up in Apple is for real. Even as the market pulls back after a healthy move up since last Monday, funds are still rushing in to buy the name. The stock has already moved almost $25 points since its bottom just seven trading sessions ago.

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.

From there the market may break 1130 on the S&P 500. If that happens, Apple will see fresh all-time highs well before earnings. And unlike previous earnings reports, October earnings will likely lead to a major move up for Apple. In fact, if the market holds above 1130 when Apple reports in October, it should be above $300 a share within a day or so after the report. I’m looking for Apple to hit $350 by January.

Disclosure: At the time of this writing, the author is long Apple. The information contained in this blog is not to be taken as either a trading or investing recommendation and serious traders or investors should consult with their own registered financial advisors before acting on any thoughts expressed in this publication.