Zach's Weekend Roundup

This was a great week to be an AAPL investor and a solid week for the markets. The Dow, S&P 500 and the Naz all broke through their key resistances, with a tremendous surge on Friday, and put in 3 month highs! It was an amazing show of strength from the Bulls, and the Bears appeared to take a cold shower. Even in the face of horrible reports and huge write downs from the financials, the markets just shrugged it off and sent Merrill Lynch (ME) and Citigroup (C) higher. Obviously the market felt that they have already baked in the their weakness from as far back as Q3, and are looking forward to a more positive year coming.

The inverse head and shoulder patterns played out, fronted by the huge positive divergences that we have been following since mid February. Every time the Bears tried to break up this momentum, they came up dry with weak volume. This was in stark contrast to the Bull rallies, which were generally very strong.

So, now we've broken through the necklines, it's time to establish these as solid support and use it to launch a new upward trend. Looks like the drag of the financial and housing markets weren't enough to bring the rest of the economy into negative growth. I believe a lot of economists are going to have to reconsider if we ever were in recession. Sure we started to stall, with 0.6% growth in Q4 and 1% growth in Q1, but it looks like we'll end up with 1% or slightly better in Q2.

Bully, bully, bully! Agriculture, Oil and Tech have been big winners in the past couple of weeks, with energy close behind. And Transports did well despite the spike in Oil. The Bull/Bear spread on the Investors Intelligence Survey is still inverted, which is a contrairian bullish indicator. And the put/call ratio was down to 1.04 but remains above 1.0, which should still be considered a contrairian bullish indicator as well.

The key for this week, as I said earlier, is to turn the critical levels that were resistance on the Dow, S&P and Naz, into support. Those levels are: Dow (12,880), S&P 500 (1404), and the Naz (2440).