Minyanville's T3 Weekly Recap: Market Stops Bleeding, but Big Questions Remain

By T3Live.com  NOV 09, 2012 5:02 PM

Traders have been watching Apple's sell-off closely this week, and Groupon got clobbered today after weak earnings last night.


The market was able to finish in positive territory Friday to end its post-election slide, but the small gains were not enough to prevent the worst week in five months for stocks. In a choppy session, the strongest index was the Nasdaq (INDEXNASDAQ:.IXIC) which finished 0.33% higher. Investors are growing anxious about the looming fiscal cliff that has received heavy attention in the media -- so much attention, in fact, that the sell-off may be becoming a bit of a self-fulfilling prophecy. While tax hikes and spending cuts that will be triggered in the new year could damage growth prospects for the US economy, resolution is not imperative in the way it was during the debt ceiling debate.

The verbal sparring has begun (or should I say, resumed) between newly re-elected President Barack Obama and House Majority Leader John Boehner regarding the fiscal cliff issue. Boehner wants no new taxes to balance the budget, while the President wants to raise taxes on the wealthiest Americans to generate revenue. Neither party seems keen to bargain yet, and we could face another game of high-stakes brinksmanship over the next month. In his first substantive comments since being re-elected on Tuesday, President Obama today called on the House to extend the middle-class tax cut immediately, but Republicans do not want to take that universally-agreed-upon step without additional concessions from Democrats.

The European debt crisis, pushed into the periphery during the home stretch of the US elections, is now creeping back into headlines as Greece readies to approve its 2013 budget. The new austere budget will require approval by Greek parliament in Sunday's vote in order to pave the way for another trance of aid to the bankrupt nation.

Traders have been watching Apple's (NASDAQ:AAPL) sell-off closely this week, and today the stock was finally able to stop the bleeding. AAPL finished the day 1.7% higher, but the bounce was not as impressive as bulls would have liked. The stock will need time to repair a broken chart after breaking its 200-day moving average last Friday. Don't be blinded by the name attached to the chart, and don't break your rules just because it's AAPL. Wait for a setup to develop before stepping in.

Groupon (NASDAQ:GRPN) got clobbered today after weak earnings last night. The stock opened sharply lower this morning and continued to the downside during the session. When the bloodbath was over, the already-beaten-down stock finished the day 30% lower. Now carrying a $1.8 billion market capitalization, the company's decision to rebuff a $6 billion takeover bid from Google (NASDAQ:GOOG) two years ago doesn't look so good anymore.

Google also showed relative strength to the market Friday, matching AAPL's 1.7% bounce. While both stocks have a way to go before we consider them swing long candidates, halting the downward momentum was at least the first step on a long road back.

Everyone have a great, safe weekend!

No positions in stocks mentioned.