WASHINGTON, Oct. 26, 2015 – Stocks are bobbing and weaving in Monday trading, likely reflecting the general investment mood on Wall Street. Good news, at least for frequent traders: It looks like Europe and China (and maybe Japan) are likely to crank up the monetary printing presses again, bringing free money to the market for corporate buybacks that further mask declining earnings per share. Nothing to see here, folks, just move along.
On the other hand, traders’ fingernails are being chewed to the quick over yet another incoming Fed dither-fest over interest rates. And as earnings season continues, everybody is talking Apple (symbol: AAPL) down off the price pedestal it keeps trying to climb, as if earnings that don’t beat the usual analyst underestimates will be financial Armageddon when Apple reports tomorrow.
As we write this at 1:20 p.m. EDT Monday, AAPL is sitting on the board at around $115 and change, off $3.56 per share thus far for a 3.6 percent loss on the day. Since Apple today behaves on the Dow like GM used to back in the day and has an even more substantial weighting in the averages, that means the Dow is being held back in slightly negative territory this afternoon even as the S&P and the NASDAQ are modestly in the plus column.
It’s likely that a ton of traders, investors and HFTs have been unloading AAPL since 2014, given the dangerously large positions they’d taken in this massive, frequent high-flier. But thus far, evidence for a bad Apple miss seems scanty and speculative at best. This morning’s reason: Dialog, a UK Apple component supplier, has reported a drop in overall product shipments to the Kings of Cupertino.
Oh-oh, Apple’s not selling product, we’re all going to die!
Either we’re getting the usual lies and rumor-mongering based on false evidence that traders, hedge funds and other miscreants like to deploy when they’re trying to buy stock at a lower price. Or, shorts are getting scared and need to talk AAPL down so they can escape prior to the company’s quarterly earnings report, due Tuesday after the market close. Or maybe even bulls are talking the stock down so they can get some shares at a better price before those earnings come out and blow off the doors.
Yeah, Apple could either just make its numbers tomorrow or even miss by a fraction of a penny. It’s occasionally happened before. But lest we forget, the quarter ending Sept. 30, 2015 is Apple’s traditionally weak fiscal fourth quarter, reflecting the time period when eager early-adopter buyers hold off paying for product that will be “obsolete” when the company makes its traditional slew of mid-September new product announcements, always just in time for Christmas buying.
Has it ever occurred to these Apple-dumping, Apple-shorting idiots that the company might have ordered a ton of digital components earlier in the year to front anticipated forward sales of Apple’s new products like the iPhone 6s models; and therefore might not have needed to order ahead for even more during Q4? It all has to do with supply chain management in the end, a key big company skill that Apple has turned into a state-of-the-art corporate feature.
Okay, maybe Apple will report lousy earnings tomorrow, like maybe off a penny or two. So what? If, in that case, Mr. Market decides to take AAPL down 10-20 percent, all the better later in the week for Apple value investors. In the stock market, as in your favorite department store, it’s always wisest to purchase when the merchandise is getting marked down.
In addition to being exasperating, the U.S. stock market, 2015 edition, is the most confused and hyper-reactive market we have ever seen. Nothing makes much sense, and today’s ongoing rumor-mongering, insider trading, illegal HFT front-running and spoofing, and outright corporate banditry makes current Wall Street action look much worse than a bad day on the streets of Tombstone, Ariz., in the 19th century.
In other words, due largely to the financial fantasy-land created by the Fed’s taxpayer supported welfare programs for wealthy corporations, stocks have been completely liberated from their dollars-and-cents moorings. Fundamental and technical analysis just don’t work very well in a market that’s blatantly manipulated by obscenely well-paid carnival barkers swanning about in bespoke Italian wool suits.
So, out of self-defense, we continue to stay relatively conservatively invested, while also continuing to hold in excess of a third of our portfolios in plain old cash. No point in getting suckered into the latest Wall Street poker game.
We’ll keep you posted this week, but no trading tips, at least for today.