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.
George Krum is the author of the "CIT Dates" blog and several
books available on Amazon.
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