This Day On The Street
Continue to site right-arrow
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 Under $10 with 50-100% upside potential - 14 days FREE!

Stocks Need Apple Blossoms to Continue Rally

Stocks in this article: AAPL SPY

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), 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

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,649.96 +293.09 1.69%
S&P 500 2,044.70 +31.81 1.58%
NASDAQ 4,726.1110 +81.7990 1.76%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs