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About Three Blind Mice Welcome to The Three Blind Mice . Here at the, our focus is generating daily trading ideas in the Stock, Currency and Futures markets for Investors, Traders and Brokers. We depend mainly on technical analysis (COT Analysis, Elliott Wave Analysis and... More
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  • Wednesday's Market Outlook 04/21/2010 0 comments
    Apr 21, 2010 8:56 AM

    Here's our thoughts for this morning's open.

    Bottom Line: AAPL will add to an already bloated market.

    The less than stellar reaction by the Dow and SPX futures to the AAPL news this morning says to us some broader based profit taking is close at hand. We are and aren’t surprised, if you know what we mean. We still feel the tape’s rally will end on a whimper not a bang. So a move lower will sustain most likely after the headline risk is out of the way.

    For now, we are focused on a few things worth highlighting. The overbought readings on the NDX (98% of the components are again above the 200-day MA) have spiked up once more. At the same time the VIX dropped, quickly I might add. Sometimes how fast these levels change is more important than the actual levels they reach. In this case, the sense of urgency to get back in so soon after the GS news is what stands out.

    This is a key concern of ours. Yes , one can take this as a bullish sign since the market is taking bad news well. However, we see it as the dip buyer doing his part in this topping process.

    We are watching  commodities quite closely for tells in the equity market. Our conviction is high that Crude is close to an important peak and that the Dollar and Bonds are close to making a bullish run. Under this scenario, the SPX should fall. We see the average “Joe” looking to buy breakouts, expecting major extensions. We see it as impending “hook” sequences, whereby the tape fades after sucking in the “last guy”.

    We are taking this cautious stance since much of our model work suggests it’s the right way to view the current environment. Our approach in here is still balanced (both longs and shorts) until we see more confirmation of pattern breakdowns. This will keep us on the right track and should prevent us from making any major mistakes.

    Off the AAPL news, we see a few tech names that are setting up as good long trades. EMC, VMW  and NTGR are a few to mention and we will alert you if we pull the trigger on these.

    Disclosure: The may have positions in the stocks discussed.

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