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Daily State of the Markets Good Morning. After defying the naysayers, a great deal of logic, as well as gravity for the past four and one-half months, the coolest company in the world has had a rough go of it over the last week. After hitting a high of $644 on April 10th, shares of Apple (AAPL) have done a pretty decent swan dive impression as the stock closed yesterday at $580.13, a cool $64 (or just about 10%) off the top – all in a matter of five trading days. But after completing a +57% run in 2012 alone, I guess a quick little dance to the downside was to be expected. Apparently an influential analyst’s fear that the brainchild of the late Steve Jobs might miss their numbers on Mac sales had a lot to do with the selling on Monday, which took AAPL down -4.15% on the session. Or maybe it was the talk of difficulty overseas or the latest lawsuit – I’m not completely sure. You see, while I will admit to owning the stock from somewhere around $395, I must also admit that I don’t spend an inordinate amount of time on a daily basis poring over all things Apple. However, I do have one observation that may be worth your time this fine Tuesday morning. There has been an awful lot of discussion over the last couple of months about the inordinate impact Apple shares have on the various indices. There has been worry that the extreme weighting the company now carries in the indices might bring the overall market to its knees if and when the world’s biggest company stumbled. However, while the king of cool took it on the chin Monday for the biggest one-day decline in months, the venerable DJIA gained 72 points and both the midcap and smallcap indices also finished with green screens. Oh, and the S&P 500 wound up lower by just -0.05%. My point is that as far as big, bad, market-killing events go, this one wasn’t so bad. Well so far at least, as all anybody could talk about after the close was how much farther Apple might fall (I put my quarter on the $560 square, by the way). But, the key take away is that Apple’s demise has so far at least been pretty much a non-event for the overall market. And from my perch, that seems like a good thing. As I’ve been saying recently, it appears fairly obvious that if Europe doesn’t kill this market (this time all eyes are on Spain – and I’m watching EWP daily), and China doesn’t kill this market (FXI is my fav to watch), and even a 10% dive in Apple and/or Google (GOOG) doesn’t kill this market, then we’re likely experiencing a simple consolidation phase. So, after a quick 12.8% gain to start the year for the SPX and a -4.25% pullback over the last couple of weeks, it looks to me like it is ‘game on’ for our two teams. During a consolidation phase, the two teams tend to duke it out over their respective theses. The bears have Europe (yes, again), China’s slowdown, no more stimulus on the horizon, and rising inflation in their corner while our heroes in horns can point to profits at an all-time high, an economy that appears to be growing steadily, low interest rates, and decent valuations. As such, each data point that supports either team’s view tends to get the attention of the fast money crowd for that day. So, once this period of “price discovery” (aka seeking an equilibrium point) is complete, the bulls just might be able to resume their recent rally. But until then things get bumpy. Especially if we start to see an Apple a day hitting the tape. Turning to this morning… Strong demand at the latest Spanish T-Bill auction as well as a better-than-expected German ZEW report is being viewed as a positive this morning in Europe. As is the fact that Japan pledged assistance to the Eurozone. But the day is filled with earnings and economic data. As of this writing stock futures are pointing higher. On the Economic front…Housing Starts in March were reported at an annualized rate of 654K, which was down -5.8%. March’s reading was below the consensus for 701K. However, Building Permits for March rose to a rate of 747K. This is up +4.5% and was above the consensus of 691K as well as last month’s unrevised reading of 715K. In addition, we’ll get Industrial Production later this morning. Thought for the day… Remember that it pays to be open minded (in more ways than one)… Pre-Game Indicators Here are the Pre-Market indicators we review each morning before the opening bell… !========>
Positions in stocks mentioned: AAPL For more of Mr. Moenning’s thoughts and research, visit StateoftheMarkets.com !========> The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning’s opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of StateoftheMarkets.com and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. One should always consult an investment professional before making any investment. Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided. The analysis provided is based on both technical and fundamental research and is provided “as is” without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed. The information contained in this report is provided by Ridge Publishing Co. Inc. (Ridge). One of the principals of Ridge, Mr. David Moenning, is also President and majority shareholder of Heritage Capital Management, Inc. (HCM) a Chicago-based money management firm. HCM is registered with the U.S. Securities and Exchange Commission as an investment adviser. HCM also serves as a sub-advisor to other investment advisory firms. Ridge is a publisher and has not registered as an investment adviser. Neither HCM nor Ridge is registered as a broker-dealer. Employees and affiliates of HCM and Ridge may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Editors will indicate whether they or HCM has a position in stocks or other securities mentioned in any publication. The disclosures will be accurate as of the time of publication and may change thereafter without notice. Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results. !========> |
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