This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Stocks Need Apple Blossoms to Continue Rally

NEW YORK ( TheStreet) -- We began the week with a ValuEngine Valuation Warning with more than 65% of all stocks overvalued, with the Dow Industrial Average above 14,000, and with the yield on the U.S Treasury 30-year bond approaching 3.25%. This negative fundamental backdrop did not include Apple (AAPL - Get Report), which has been undervalued for several weeks now.

Even with a down market Monday, all major equity averages except the Nasdaq 100 Index were overbought on their weekly charts with 12x3x3 weekly stochastic readings between 83.29 for the Nasdaq and 92.31 for the Dow transports. The Nasdaq 100 has a stochastic reading rising at 77.76, which is still below the 80.00 overbought threshold. While the markets became overbought, the weekly stochastic reading for Apple was extremely oversold with a reading well below 20.00 at 12.89.

With overvalued fundamentals and overbought technicals the market reality, my suggested investment strategy is to book profits and raise cash on strength to risky levels, not what the crowds on Wall Street are touting, which is stocks are cheap and to buy pullbacks.

It seems that whenever stocks are overvalued and overbought and at or near all-time highs investors want in when they should be booking profits. And vice-versa, whenever stocks are undervalued and oversold investors want out. Buying high and selling lows seems to happen at every market high and at every market low, including at the March 2009 lows.


The anomaly of Apple, the proverbial market leader to the upside, is that this stock has become a market drag. This leads to my conclusion that this undervalued and oversold stock must blossom for the stock market rally to continue. I last covered Apple on Feb. 5 in Bobbing for Apple, Amazon and Google Shares , where I showed $421.05 as my annual value level a semiannual pivot at $470.21 and my annual risky level at $510.63.

This morning Apple is blossoming above its semiannual pivot at $470.21 in pre-market trading on the news announced Thursday afternoon that the company will trim its cash hoard by $45 billion over the next three years, including special dividends.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
SPY $212.46 -0.11%
AAPL $131.78 -0.20%
FB $80.14 -0.50%
GOOG $539.78 -0.00%
TSLA $251.45 1.62%

Markets

DOW 18,126.12 -36.87 -0.20%
S&P 500 2,120.79 -2.69 -0.13%
NASDAQ 5,097.9760 -8.6170 -0.17%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs