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After last week's boring but one-sided trading action we are looking for well-rested traders to step up and buy the market for a bounce. The number one question remains whether or not we get a year-end squeeze higher. For now our first price target above is betweek 1200 and 1220. After that we re-evaluate. Should we overcome 1220 easily we would be inclined to give a further rally up to as high as 1300 a better chance. Baby steps here, that's the only way to trade this schizophrenic tape.
The dollar remains the single most important chart to focus on in our opinion. If we manage to get its direction right we should be fine with stocks as well…assuming the inverse relationship remains. In the immediate term it is overbought but should it find support again soon and rally we see a target in the low to mid 80s, which translates into equities testing or falling through their early October lows.
AAPL is at a critical spot a) its 200 sma b) up-trend line since 2009 c) hirozontal support. A solid break below those levels (if and when) would setupa decent bucket 2 short.
