John Mylant's  Instablog

Technically Speaking

RSI- for the second straight day, the SPY has been in the over bought region of the RSI indicator. In this region, investors usually expect the stock to pull back but that does not mean it will. It is just a sign that the stock could be slowing down that's all. In this strong upward trend I would expect it to do nothing but slowdown.

MACD- I like to watch the MACD indicator and the RSI indicator working hand-in-hand to give me tandem signals. But what I am observing here is that the Mac D still has not peaked yet and for this reason I would expect the stock to continue to move up. Before the stock moves back I like to see in over bought position and a peak in the MA's of the MACD but I have yet the sea the top so that's what I am waiting for.

Bollinger Bands- the stock continues to hug the upper Bollinger band signifying a very strong bullish move up. At this point, I would not expect the stock to slow down until I see better signs from both the RSI and MACD.

Summary- even though the trend is strong, I have also noticed that the present move up as a 45° angle and that is very strong and I do not believe that the stock will be able to continue to move this high much longer without arrest. But make no mistake it is very strong and the bullish move is not given me any signs that it will slow down yet.

Current Events

With the broad S&P 500 Index (.SPX) gliding once again into uncharted territory and posting four straight weeks of gains, the talk of Wall Street's rally inevitably hitting a ceiling is starting to get old.

As the market continues its upward move, some market participants are beginning to believe that the rally is not a bubble but rather the start of a new bull market. Others argue, meanwhile, that the strong momentum is not based on fundamentals like economic data or corporate earnings but is relying heavily on easy monetary policy from global central banks.

The CBOE Volatility Index, or VIX (.VIX), Wall Street's fear gauge, is down more than 1 percent for the week.

Even at these levels, a popular options gauge shows investors are placing optimistic wagers on the stock market, positioning for the current run-up to extend for the next three months.

Earlier this week, the Credit Suisse Fear Barometer, known as the CSFB Index, fell 11.4 points over the past two weeks - the largest decline on record - and is now at a one-year low of 21.73.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Technically Speaking

RSI- having touched the upper band doesn't look like it's come to push through the 70 this time even though it is flirting with the upper Bollinger band. For this reason looks like us can state bullish in the following week.

Bollinger Bands-this is interesting, I did not expect the stock to move to the upper band like it has again. Presently continues to hug the upper band which is the strongest indication of a bullish trend. (click to enlarge)

MACD-MACD indicator is giving us the strongest indication that the trend and momentum is going to continue into the following week because it doesn't like it has yet reached a top is sitting well in the bullish territory.

Summary-everything in the SPY chart indicates that the stock continues to be bullish and I would expect this to continue into next week.

Current Events

Some analysts say that when the market starts off this strong, it tends to keep the upward momentum going until the end of the year.

"Instead of 'Sell in May and Go Away,' we may be setting up for a surprise May rally," said Ryan Detrick, senior technical analyst at Schaeffer's Investment Research in Cincinnati, Ohio. "What's encouraging is that small-cap stocks have been outperforming the market recently. It's a sign that the market is going for even the riskiest sectors."

If 2013 plays out like that - with another 9.7 percent gain in store for the S&P 500 - the broad index would finish the year up a whopping 24.3 percent.

The American consumer will get Wall Street's attention next week when a raft of economic data and retailers' earnings could shed some light on whether they shopped for more than just the bare necessities.

Retail sales for April will be released on Monday by the U.S. Commerce Department.

Other economic data on tap includes April import and export prices on Tuesday, followed on Wednesday by the U.S. Producer Price Index for April, the Empire State Index for May, industrial production and capacity utilization for April, and the National Association of Home Builders Index for May.

On Thursday, the economic agenda includes the U.S. Consumer Price index for April, housing starts for April, weekly jobless claims and the Philadelphia Fed's survey for May.

With 89 percent of the S&P 500 companies having reported earnings so far, 66.7 percent have topped profit expectations, above the average of 63 percent since 1994. However, only 46.4 percent have beaten revenue expectations, well under the average of 62 percent since 2002.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Apple in Transition

Is there a transition for a stock between what I would call "a growth stock to a blue-chip stock"? For a company like Apple (AAPL) it will be interesting to watch how the company progresses. This year is not supposed to be a favorable year as analysts expect revenue to decline just like it did in 2012.

I am wondering if we are beginning to see the morph of "Apple" as we knew it into a more stable dependable long-term investment company. Its recent history identified it as a "product cycle driven" company which meant an appealing growth investment that brought "growth" investors to the stock. But the company may morph into a software and service company which would mean steady and dependable earnings as compared to hyper earnings on certain quarters. Therefore in the future the company may attract income investors instead of growth investors because it appears that sharing dividends will have more of a future appeal than growing the stock so quickly. The days of Apple's skyrocketing in price on a weekly basis are over.

This is a good thing for Apple, investors, and the market as a whole. Can you imagine the company continuing to grow like it has for the next few years to a price that is so outrageous that when it would collapse like it is now the markets would be greatly affected, and not in a good way? As the transition continues Apple should continue to attract investors and keep its stock relevant with things like capital returns.

This "corporate maturing process" does not mean that Apple cannot come out with new innovative products that vault the company higher. If you have watched the tech sector and as companies come out with new products, the process moves in cycles. If Apple does come out with a new innovative product that moves the industry it will take some time and this gives time for the company to mature.

The iPad: Example of Apple's Sustainability

Even though the company appears to be in transition, superior products will keep it on top of its industry even as it continues its research for new innovative products. Recently, the iPad was given the number one position by JD Power and Associates as the tablet with the greatest consumer satisfaction for the second year in a row. In its research, JD Power ranked consumer satisfaction in five categories:

• Performance
• Ease of Operation
• Styling & Design
• Features
• Cost

Tablets were ranked side-by-side on a 1000 point scale of satisfaction. The iPad came in first is 836 points followed by Amazon's (AMZN) Kindle Fire Tablet at 829 points while Samsung came in at a close third with 822 points.

Even though these scores look close there is one thing that set the iPad a part. The highest overall rating for product is called its "Circle Ratings for Consumers" and Apple is the only one that received a score of "5" which denotes the best product. The next highest score was "3." This research is important because it gives us an idea of the stability of Apple products and the ability of the company to continue to lead the industry. The study by JD Power and Associates also found that 94% of highly satisfied tablet owners are more likely to purchase other electronic devices from the manufacturer that they are happy with. This example points to Apple's long-term sustainability because of its pursuit of high quality products.

Things Are Going Apple's Way

Back when Google (GOOG) bought Motorola for $5.5 million for its patents in development technology, the reasoning behind it was to help protect android from threats by Microsoft (MSFT), Apple, and anyone else out there who would try to infringe upon the company's technology. The logic was sound at the time, but things have not panned out as Google hoped they would and the investment is just not paying off. As one example, recently a federal judge ruled that Microsoft would only have to pay Google pennies in royalties for sale for each Xbox videogame system instead of the billions in Google sought because of patent infringements. This is not the first case that the company has lost. It appears that patents from Motorola may not be as valuable as first thought.

Even though it appears that the company allegedly has good arguments, there is no good ruling to show. The recent ruling between Google and Microsoft saw the judge strike down Google's estimate of $4 billion on the patents for videogame decoding and claim it's only worth $1.8 million. Since this article is mainly about Apple, it is important to know that Apple also won a case against Google. Trying to limit Apple's ability to ship Chinese made iPhones to the US, Google lost when the US International Trade Commission nixed Motorola's claims on patents on a phone sensor. So things are working out for Apple during its transition as a company

What appears to us as Apple's fall from grace may not be all that bad. The company still has top-of-the-line products and is respected by the consumer for this. With high quality products and challenges going its way, I believe the transition the company is presently in may be for the better for investors in the future. Apple will always be known for strong R&D and is not a company dedicated to resting on its laurels. I believe this transition period for the company will help it become a long-term stable company that others will be able to depend on for years to come as it starts paying out its profits to its shareholders.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.