Why Apple Is the Most Important Stock in the World
Plus, a market overview into earnings.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
In fourteen hundred ninety-two Columbus sailed the ocean blue. That's sort of a big deal but it evidently wasn’t enough to warrant a bank holiday.
Instead, the US stock market continued to pave a path of maximum frustration. Despite the overseas fright and anxiety in front of earnings, the NASDAQ (INDEXNASDAQ:.IXIC) is up 20% for the year and the S&P (INDEXSP:.INX) (16%) and Dow Jones Industrial Average (INDEXDJX:.DJI) (11%) are doing just fine, thank you very much.
The year-to-date price action bodes well for the percolating performance anxiety—the longer the mainstay averages remain buoyant, the more likely it becomes for upward pressure to manifest into year-end as fund managers chase relative performance—we still need to see both sides if we're to measure risk with a forward lens.
Indeed, if we're to rank our four primary metrics, Psychology (performance anxiety, faith in the system, perceived credibility of our leaders) and the Structural Landscape (global central bank intervention, HFT, ZIRP) are One and One-A in terms of importance.
Market Fundamentals—which are already hinting at "slowing global growth" after Hewlett-Packard (NYSE:HPQ), Federal Express (NYSE:FDX), Caterpillar (NYSE:CAT) and Norfolk Southern (NYSE:NSC) guided lower—are creeping into the collective consciousness, with Alcoa (NYSE:AA) and Chevron (NYSE:CVX) reporting tonight.
Through a technical lens, our twin road maps remain in place: The S&P trend-channel, as shown below, will violate to the downside with a breach of S&P 1450. Until such time, we’re just playing, playing in the band.
The NDX Head & Shoulders will "trigger" with a move below NDX 2770 (and “work” in a technical vacuum to NDX 2670ish) and conversely, will invalidate either, 1) with a move above 2830 or, 2) if we continue to slither sideways. See both charts but remember, charts are a better risk context than catalyst—particularly in the midst of earnings season.
A lot of folks insist that Apple (NASDAQ:AAPL) is the most important stock in the universe. Given it’s the largest company in the world, with roughly $600 billion in market cap, it’s hard to argue with that. He’s another reason not to argue.
I juxtaposed the chart of the NDX vs. Apple just for schnitz and giggles While they more or less mirror each other, you will see that Apple breached the right shoulder of its Head & Shoulders pattern (which works to $610 or so) while the NDX has yet to trigger the dandruff discussed above.
Other elements of note today include the banks (sticky in a sluggish tape, which is constructive), the VXO (^VXO) (at Bar Mitzvah level, which is traditionally low but needs an asterisk on it as a function of synthetic liquidity) and the transports, which hang tough after rallying off the end of their recent range.
And yes, the important stuff—Europe and earnings—are entirely more important than what we see today so remember that the definition of an investment should never be a trade gone awry.
After fingering the trigger on some QQQ (NASDAQ:QQQ) puts last week—and choosing instead to stick with alpha over delta—I enter today's session with a smallish 1/2-position in Research In Motion (NASDAQ:RIMM) and a lot of dry powder. As always, I—and a lot of folks smarter than I am—will discuss this in real-time on the Buzz & Banter (click here for a free two week trial!).
To paint a real-time picture of “theta,” yesterday was the twentieth time since August 17 that the NDX traded in and around this level. If you've been long gamma (read: if you own options), I probably don't need to tell you this. It’s not enough to pick the right direction in this environment, you’ve got to nail the timing as well.
- Good luck today, and remember that profitability begins within!
Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.