(AAPL) Bulls Own Next Week Too 17-21 October

Investors and traders who doubted the move higher, and sold into a sleepy market ahead of resistance near S&P 1,220, are about to get a wake-up call next week. Mr. Market has pounded his hoofs long enough below the trading range highs and he’s ready to go higher.

A move early next week above the August swing highs at 1,230 will generate momentum to push for the 200-day moving average up above 1,270. There is little resistance between here and there, just thin air and plenty of doubt — awesome fuel for a rally.

When I wrote about the power of the reversal that started Tuesday October 4 in “Mr. Market Shows His Horns,” I said you could plan your trades around the strength of the follow-through. You got that strength on Monday and Friday.

What About Europe?

I have been writing for months that financial leaders in Europe — and US and Chinese leaders behind the scenes — would take care of the mess. That’s what is probably going on.

Don’t get me wrong. Their crisis isn’t over by any stretch. But confidence has a price and it will be bought, no matter how many trillions of euros it takes. They didn’t name it the European Financial Stability Facility just for the catchy rhyme.

And the markets — not just equities, but the euro, crude oil, and copper — are telling you it’s coming.

Earnings Trump Recession

I also warned you that earnings would become more important than European news anyway, especially as we get more evidence of less chance for recession.

I will be looking to add to long positions with leveraged index ETFs UPRO and TNA on any dips on Monday and Tuesday. Any badly received earnings reports could be excellent opportunities to get long.

With 20% of the S&P due to report, we should have a lot of good trading swings. Some of the bigger names on deck are Apple (AAPL), General Electric (GE), Goldman Sachs (GS), IBM (IBM), and McDonald’s (MCD).

Oh, and thank you Apple, for leading the charge with a new all-time closing high. Proof once again that it pays to be a stock-picker so you know who the earnings leaders will be when money piles back in.

I’m not saying this is the start of the next the bull market. I’m just following the powerful trend started by a very likely bottom last week. Though the lows may be tested this year, that event is not coming next week. Of that I’m fairly certain.

Kevin Cook is a Senior Stock Strategist with Zacks.com

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