I did not share the market's enthusiasm at the end of last week. I thought about the exact wording of the statements being made and saw little reason to believe a budget compromise was forthcoming. With several hours to go before today's market open, stock futures are down on reports of new demands being made by Senate leaders.
This is a very risky time to initiate new trades, or to remain in existing trades. With two days of sharp rises at the end of last week, the VIX has dropped back down to mid-range. It may be easier now to buy puts as protection on existing positions. This is a good time to consider exiting weaker positions.
However, it is always a good time to prepare for the future. Look for top-name stocks that have not been showing weakness. When the current budget and debt-limit problems get resolved, they may be the first to rocket upwards.
For example, over the past two weeks, the S&P-500 has dropped sharply, then rallied enthusiastically, in response to the events in Washington:
But Apple has barely budged. It traded uncharacteristically within a tight sideways band, on below-average volume:
AAPL is ignoring the overall market. It bears watching, as any breakout from the current tight range may be the start of an extended move, and I suspect the direction will be upwards.
While Apple's recent iPhone 5C has been selling below expectations, that is because the higher-priced, higher-margin 5S has been selling out. Within the next couple of weeks, Apple is set to introduce new iPads. Speculation on the new iPads suggests they will be formidable competitors to existing desktop PC's. Apple is also due to announce earnings on October 28th, after the market.
Watch APPL closely, and if an actual budget/debt agreement is comes through, any AAPL breakout on the upside should be taken seriously.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, type in www.markettamer.com/seasonal-forecaster
Copyright (C) 2013 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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