Apple, Markets Say Goodbye to the 20s [5:05m]: Play Now | Play in Popup | Download (461)

Although Apple started the trading session today on a down note, our favorite company rebounded and rallied into the close and plotted a bullish hammer, leaving it’s 20 Day Exponential Moving Average in the dust. The S&P and the Nasdaq followed Apple’s lead extending the distance from their 20 Day EMA as well. This was an important day for Apple and the markets, because not only did we say goodbye to the 20s, we did so with strong market internals.

Mastering the 20s was an important event for the Bulls, because it marks an important swing of momentum away from the Bears. And it provides the platform that the Bulls need to extend this rally and affect the longer-term outlook. That’s the key right now, because as good as the near-term looks, and although intermediate-term is beginning to crack, the long-term outlook is still quite poor. The damage that this bear market has inflicted runs deep, and it will take a long time to undo. If we can extend this rally for another week, then the weekly charts will come around, and the monthly charts will improve dramatically.

Now, from a Technical Analyst’s point of view, this is precisely what a trader wants to see, confirmation that the 20s now represent support, providing a platform to continue this rally. And from an emotional point of view, there’s a great relief, as volatility is melting away, leaving a stable, tradable market that I’m sure most of you want to attack. To be successful here, we need to push our emotions aside, and stick with our strategy of capital preservation.

We need to keep reality front and center, because the facts are that the economy is still in very poor condition. Sure, the credit crisis is loosening it’s stranglehold to a degree, but it’s still suffocating the consumer and the ability of businesses to conduct business. The situation cannot be ignored, manufacturing is way down, unemployment will continue to rise, factory orders are drying up, and consumer confidence is the lowest it’s been in decades.

All right, so we know things are bad. So, what do we do? The answer is simple. You go with the trend until the trend is over. And for now the trend is up, so we go with it. It’s a welcome relief compared to sitting on the sidelines for the past couple of months, biting your nails, witnessing the carnage, fortunes lost, and wondering if there was any end in sight. But at least for now, things are looking up, so quoting the old proverb, “You have to make hay while the sun shines.”

The market is on a buy signal my friends. The trend is up, and there’ll be pullbacks along the way. So the strategy is to buy on those pullbacks, and sell into strength. I don’t recommend playing against the trend as Bear market rallies can be quite explosive. And as I said earlier, don’t let your emotions get in the way of taking profits. Don’t lament over whether you should have held this position or that position a little bit longer. Just take your profits and move on.

Investor in the Wilderness Podcast

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