The State of the Trend
The big story of the week was AAPL's 80 point drop which sent the stock towards its next support level around $400.
What was bad for AAPL, and related stocks (the NDX got pushed back in its box) had, however, unintended beneficial consequences for the other indices, by preventing market internals from getting overbought. This helped sustain the rally in the DJIA, and resulted in the SPX reaching our first target zone:
From a broader point of view, the SPX's performance continues to be consistent with previous reactions to similar monetary policies in the recent past. Although small hickups along the way are to be expected, until the trend changes, the '07 highs become the next target.
Being contrarian for contrarian's sake can have very unpleasant consequences. Keeping an eye on market breadth can help avoid many disappointments.