Apple does a lot of things right, especially since Mr. Jobs righted the ship. Yet it still boggles my mind that each and every year the announcements from Apple’s WWDC make front page news around the world. The New York Times, CNN, and every major media outlet fall over themselves regurgitating the key-note ‘announcements’. Does this surprise only me? Hello? It’s a campaign rally…
Possibly, it touches a nerve, I participated in the early conferences, when Newton was released, for example, or NEXT was all the saving rage. I remember clearly the circus-like atmosphere Apple produced for its developers, we were chomping at the bit (16 at the time) for a multi-threaded operating system. Maybe the NEXT OS was finally something that would play well with Windows, and we could finally sell something. Windows was eating Apple’s lunch, everywhere, and as an Apple faithful, the future always seemed just out-of-reach. At the time our sect was a self-contained band of developers, and a small group of passionate users. The faithful have since taken on Tea-Party or Green Bay Packer type proportions, thanks to the iPhonePadGadgetMac. Crafty, very crafty.
I’ve come to realise that what the press should be watching (or listening to), isn’t what Apple has to say, but how Apple chooses to say it. Like any good politician, their basic strategy has worked for decades, they’ve mastered generating buzz. It may seem relatively ‘recent’, but they’ve been perfecting buzz-craft since the inception of the first Mac. Apple has been setting the WWDC as a target each year, not just for the press and the developers, but for each and every employee at Apple. On one hand, I can’t think of a more manipulative use of smoke and mirrors, yet on the other, imagine how this must focus attention from the inside of Apple. Everyone is ALWAYS working for THIS conference, every single employee works to contribute to the success of this conference.
Can you think of another company that has such focus? I can’t.
I’ve been sitting out much of this recent market levitation for a few reasons:
My sentiment in February was that we were nearing a top at the 135 resistance on the S&P (here), hence some calendar spreads turned out to be badly timed. It was time to reassess what I was seeing on the charts. A low volume risk-on climb day after day and given reassuring corporate profits, employment, and sentiment numbers, the bulls had a decent argument. They still do in fact, even with a pull back to 135 on the S&P we’ll still be solidly trending upwards. As Europe (re)emerges the bears are finding their way haltingly back this week.
This parabolic rise in AAPL simply looks like a classic end-of-cycle bull market to me, as mentioned here. You can’t stop hearing/reading/watching AAPL pundits. That screams, ‘bail’. Nearly everyone holds and continues to buy AAPL. It used to be that the Apple faithful were geeks arguing against the behemoth Microsoft. Now the financial community has taken up the kool-aid. I don’t believe the two mix well. Where $AAPL goes the market is likely to follow.
I’ve also been watching Europe, while living here. Greece, Spain, and Italy are serious problems both socially and economically. Besides the obvious election year politics in France, pushing the periphery onto the media back-burner, and the LTRO, have clearly been market-risky. The sovereign spreads are starting to widen quickly again and we’ve seen this story play out before. Very recently ‘parity’ was being whispered, and quickly avoided with the X summit. I expect more summit’s this summer. The Euro is so closely tied to the peripheral-risk, that no-one has any idea how bad it might really get, how long it might take to rebalance, or what solutions have fundamental effects. The risk on sentiment is only being played out on the equity markets or in dollar lending. The euro and euro lending is on ice. What impact will this have on the US markets is unclear.
Yesterday the QE3 ‘reassessment’ was striking and missing the gold short trade was clearly a mistake and still resonates in my head this morning! Add the falling euro too falling gold, no QE3, high oil prices, a low VIX and I’ve plenty of arguments to hold off the bulls atleast until the S&P pulls back to 135.
I’m going to continue holding my 140/135 bear spreads I mentioned here. I’ll be also watching gold closely as the levels I mentioned here have been triggered. The $SPY feels toppy again to me, will I be right this time?
I’m baffled at the near parabolic ascent of AAPL. We all know the history, the soap opera, the religion, the brilliant (though not diverse) products, the cash, the dividend, the buy back, etc. Ok it’s a great story, but recently I have the feeling they’re holding up the world.
These are some indicators I follow with todays data. I added AAPL for a perspective.
I didn’t add the $VIX but it spiked up with the sentiment miss this morning. Will the VIX follow AAPL?
And my favorite: Even with a 5% correction in the $SPY we’ll still be in a bull market, that leaves a good reversion to the mean.
One thing I’ve learned from losing money is to avoid betting against the trend or calling the top/bottom. That’s a fools game and you’ll be stopped out quickly. On the other hand, now is the perfect time to buy some protection for expiration on the April, May and January time horizons.
For the entire length of this 3 month rally, the upward steps have lingered under 1% and usually under .5%. Only in the last 10 days has the VIX started to signal caution. The VIX is now solidly over 20 and approaching it’s recent high of 22.
Yesterday at the close we saw an unusual large pop at the close, and today we saw AAPL collapse 25 points in 5 minutes. AAPL lost it’s luster very quickly today, and that’s worrying… Euphoria is the word I’d use. Everyone has AAPL, literally, so sell. It’s hard to write that, given how popular, rich and well regarded that stock is. For how long the euphoria might continue is hard to say, but I read here that they accounted for 90% of the gains for the NASDAQ in yesterday’s trading. Strange. Buy some protection if you’re long AAPL.
Option expiration is coming up this Friday, and tomorrow’s PPI and claims numbers risk to add fuel to this VIX fire.
Aren’t fixing inflation targets and locking down interest rates contradictory statements?
I am very sceptical of this little bounce off the words ‘historic’ which are crossing the wires. “In historic shift, fed sets inflation target.” Wow. So if I understand (which I obviously don’t) on one hand, we’re printing money, for more jobs and to save the banks, fine. I can buy that. But we’re also printing money and have been for a few years. This is inflationary. Period. It raises our default risk but with luck will lower our $15,000,000,000,000.00 + national debt, great. Inflation will also makes pickles, beef, homes, etc. more expensive, and I like pickles. So how is setting an inflation target at 2.0% even remotely believable? This is pure marketing. I can print because I have a target. There’s a 100% chance they won’t hit their target.
For the moment the markets are buying it. It’s Dollar negative which is boosting the Euro, Gold, and Silver.