Moral Hazards Amok

The Dow's Lost Decade

Good work, Fred.

AAPL is a great company with great potential, yet it’s my opinion that it’s also great short and will be unless it breaks above $90 and stays there.

Pull it up on a candlestick chart and notice the incredible support it had around $87. Yet on Thursday, (Nov 20) it broke down through that support very convincingly with high volume. That strong support is now strong resistance.

Friday, it set an even lower low but did not make it back to Thursday’s high. It also deviated from the general market in that the $SPX was up 6.3% but AAPL was up only 2.6%.

Fundamentally, this consumer stock hasn’t yet been punished enough to reflect market realities, imho. The great credit superbubble has burst (as I’ve been pointing out for months) and iPods, iPhones, and music downloads at .89(?) are not a necessity that today’s shell-shocked and credit contracting consumer really needs to have.

This stock has some support around $70, but I expect it to break through that without much effort.

I’ll go long when we start to crawl out of this financial vortex.

Disclosure; purchased April puts on AAPL last week.