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Random Thoughts: The Reverse Newton

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Tying up a trying five-session set.

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Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

It's been a busy week on Wall Street; between the FOMC meeting, stress tests for the banks-Citigroup (C), SunTrust (STI), Met Life (MET) and Ally Financial missed the cut-a disgruntled former Goldman Sachs (GS) employee venting in the media, and options expiration, there has been no shortage of action.

The most intriguing dynamic, however, may be the price action in Apple (AAPL), which lifted as much as 10% on the week and has rallied almost 50% this year (and it's only March!). To put this in perspective, Apple-sporting a market capitalization in the $550 billion range-is valued more than General Electric (GE), Intel (INTC), and Google (GOOG) combined.

To be clear, I love my iPad2, iPhone4, and iTouch; as a consumer, I drank the Kool-Aid a long time ago. As a 20-year stock market veteran, however, I feel like I've seen this movie before. Indeed, if you overlay the current trajectory in Apple against Google in 2007, they align perfectly (hat tip Doug Kass on bringing this to my attention).


Click to enlarge

Past performance is obviously no guarantee of future results-a smart man once said that you can pick the direction of stocks or the timing of a move but you'll rarely pick both-but this warrants a mention as the world holds hands and Siri sings "Kumbaya."

Of course, where you stand is a function of where you sit, and the single most important rule of thumb in the markets is to sync your time horizon with your risk profile. We've seen this parabolic frolic before and it was always different-until it wasn't.

Sir Isaac Newton would most certainly agree.

Random Thoughts:
  • We spied the pattern on Wednesday that "works," through a pure technical lens, to S&P 1420 or so, although I'm not leaning that way (I update my posture in real-time on the Buzz & Banter). See both sides as we edge into March Madness.
  • I recently read that short interest in Research in Motion (RIMM) is exceptionally high, and perhaps for good reason-Apple is eating its lunch. Still, this is on-the-margin bullish through the lens of supply/demand dynamic (as the shorts will presumably have to cover one day).
  • I haven't touched my RIM position since I rolled the dice and bought some April 15 calls with house money (after riding the stock from December into January), but I may roll those puppies out and (literally) buy more time.
  • While I didn't see the game-I was too busy, and I suppose that's a good thing-I heard that Syracuse looked awfully sloppy in their win against 16th-seed UNC-Ashville. I know the knock on this team, particularly without their starting center, but I'm not sure I've ever seen a more maligned 32-2 team in history. These kids have been through the ringer this year; they deserve to go on a magical run.
  • Finally, on a housekeeping note, I will be heading to Palo Alto on Monday afternoon to powwow with the brass at Facebook, Twitter, and Linked-In. While I hate missing market action, I would be lying if I said I wasn't excited to socialize with the lead dogs in the social media phenomenon. I will try to post from the road but lest I can't, lemme wish you the best of luck as you navigate the world's wildest reality show.
  • May peace be with you.
R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
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Positions in RIMM, SPX

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 todd@minyanville.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.

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