Apple (AAPL)

Readers probably tire of us saying this, but AAPL has been the most important stock in the current market rally. It has the most institutional sponsorship among winning stocks this year.

For only the second time this year it has paused to form a base. History teaches that stocks rising out of constructive bases provide the lowest risk entry points for gains.

AAPL has formed a seven week Square Box pattern. According to O'Neil these patterns only last seven weeks so we should expect a move one way or the other imminently. Two weeks ago price broke below its 50 MA but last week price made a power move back over the line. It closed the week just below as it retraced some of its gains on light volume.

Should the market assert itself and launch another leg higher we believe AAPL will be in the vanguard of stocks scoring fresh gains. We'd be buyers of any volume move over the brief downtrend line in the base, which could indicate a fresh break out is underway.