Should Apple Investors Feel Good About Yesterday's Rally? 14 comments
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Who wouldn’t feel good about a 12.5% rally? No one that I know! But what does it mean? Is that it, are we out of the woods? Have we averted disaster, can we all go to sleep at night secure that our economy is now on track? Not by a long shot! Think about it, what was this rally all about? Do you really think Apple (AAPL) surged on the basis of analysts' favorable outlook on MacBooks? I’m sure some investors thought that, at least those living in a bubble.
The entire market was up because of a myriad of reasons, the least of all was good MacBook news. We just came off a huge decline in the market, where we plunged through the 2002 bear market lows, became extremely oversold (meaning sellers simply ran out of gas), and snapped back on positive divergences. Then to fuel the fire we were at options expiration, shorts covered, Obama announced his “Economic Dream Team,” and the government bailed out Citigroup (C) with our tax money.
In the last 30 minutes of trading, the Dow was jumping up and down 100 points each and every minute! Is that the sign of a recovery, or is that pure panic? That's a rhetorical question, by the way! The Fear Index (VIX) plummeted, but it still finished the session at a reading just shy of 65! That’s still fear personified in anyone’s book!
Let’s get real folks. If you caught the rally up, then good on you! Take the profits, and take them quick, because nothing has changed on the economic front. Do you really think the new template for recovery is to bail out every bank that cries wolf? Who’s next, Bank of America (BAC)? This is our money that being thrown around. Who’s gonna pay this massive bill? You know as well as I, that it’s the US Tax Payer, that’s who.
Look, I’m not trying to be a naysayer here. I’m trying to take the mask off this monster so that you can see it for what it really is. This is what you call a Bear Market Rally, meaning that we are still in a Bear Market and the trend is still down.
I finished my last post with the words that we might very well see a rally on Monday, and that it would mean a great shorting opportunity. And I second that notion right here. To top that, I think we might have a little more upside to this run, but I’m afraid it’s going to trap a lot of people into taking long positions that will put what may be the final strangle hold.
Look, I knew we were going down hard at the end of the summer. Let me take you back to a post I wrote on September 10, entitled, “Apple Investors Fasten Your Seatbelts, Put on Your Crash Helmets.” At the time I had no idea it would be this bad, but I did know it would be a tough ride. But that past month has really put an exclamation point on our situation. I have been preaching cash ever since that time. Check out this post on October 4, entitled, “Apple Investors Forget the Bailout, Just Bail Now.” I’m not just saying this stuff for the sensationalism, in fact it seems I underestimated just how bad it was. Well in my estimation, we haven’t seen the worst of it yet. Please take heed of the warning.
Stock position: Short SPX.
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This article has 14 comments:
Breakdowns / breakouts should be confirmed in the next three trading days ... (more or less, what the books say)
just my 2c
Aapl could EASILY revisit 80 and below again. But when, and for how long?
Consider a return to the old obvious: It's no secret that investors and traders are well aware of how well Apple Inc. is positioned for a market recovery in whatever (volatile and gradual) form it may come in, compared to most everything else out there. It's no secret that aapl is a premium now at any perspective.
It's no secret that there's a good chance Apple Inc. beats the street next earnings by a large enough margin to pop the stock.
It's no secret that aapl has a whole lot of money in the bank, no debt and huge growth potential. It's no secret that that aapl is an extremely compelling long term play at this price despite your warnings above.
Based on the obvious, reactionary assumptions behind your advice, including the issue of timing the market for shorts, I would warn both short and long term traders to consider the contra position, especially since I suspect this is the direction big money and hedgefunds shifting to as of yesterday.
I am backing up the truck - and will back it up some more if it breaks down to an even lower level.
On Nov 25 07:42 AM luisVs wrote:
> Guy: Use the money you earned with your shorts and try to learn what
> is a breakdown. Your analysis of three days ago about "under 85,
> then 70" was really a bad one.
>
> Breakdowns / breakouts should be confirmed in the next three trading
> days ... (more or less, what the books say)
>
> just my 2c
So, I would say taking long positions right now would not be prudent. Wait and see what transpires at this important pivot point. See the following link: tinyurl.com/65jybh
That link is one of my daily email alerts, from this morning. I send out several a day. If you are interested, then sign-up here. It's completely free!
www.zacharybass.com/ab...
On Nov 25 09:21 AM Buy AALP wrote:
> I,m look at buying Apple and my question is should I wait till it
> go's to 85 or NOW.
But Zach is right. Cash is king until sanity returns to the market. It may take awhile. Maybe January earnings will be that turning point, once "investors" realize that Apple blew out expectations once again.......nah.
Huberty will alert the public that Apple will never sell an iPod again after earnings and Apple will crash to $20. People will practically be paying others to take Apple off their hands.
The market can stay irrational longer than any us can stay rational. Turn off the computer. Walk away. Go enjoy the holidays. Come back in January and buy like crazy if Apple does go down.
On Nov 25 10:59 AM sfhc21 wrote:
> You can always tell a Zach Bass article by it's title...Doom and
> Gloom boys. Doom and Gloom. Even a monkey is right 50% of the time.
>
>
> But Zach is right. Cash is king until sanity returns to the market.
> It may take awhile. Maybe January earnings will be that turning point,
> once "investors" realize that Apple blew out expectations once again.......nah.
Markets were oversold last Thursday and recovered on Friday. Apple did not participate in a significant way because of the hype around the BB Storm (the latest supposed 'iphone killer'), and the reported long lines at some Verizon stores for the Storm.
News over the weekend suggested the Storm turned out not to be the 'iphone killer' after all, so Apple rallied on Monday on this and other positive speculation about strong Mac Book sales, and maybe some short covering.
So, there you go; Apple investors should feel good, especially since the buy recommendations are starting to resurface.