Market up on Apple news, dismal unemployment

Mac Pro
Mac Pro

WASHINGTON, October 22, 2013 — Market action promises to heat up today and for the rest of the week after a tepid Monday that nevertheless saw the S&P 500 closing up a fraction of a point at 1,744.66, an all-time high and its third consecutive record close. The index is up 22 percent so far this year, putting it on track for its best year since 2009.

On the other hand, big stocks continued to remain relatively weak, as the Dow Jones Industrials (DJI) slid 7.45 points to 15,392.20. The tech-heavy Nasdaq rose 5.77 points, or 0.2 percent, to 3,920.05.

This morning’s action continued on a positive note with the S&P up slightly over 8 points at the noon hour. The Nasdaq is up slightly over 6, and the DJI is attempted to get on the comeback trail, up nearly 67 points. Boosting numbers this morning was a healthy dollop of the “bad news means good” phenomenon, namely the limp official jobs numbers, being reported late—along with a rush of other Federally compiled data this week—due to the government shutdown.

An Apple a day…

In other news, Apple announces its latest iPad models at a press conference that’s already underway on America’s left coast. Word is that other surprises may also be announced. High on the list would likely be the latest iteration of the Macintosh OS X operating system, code-named “Maverick.”

An obvious departure from the company’s big cat naming scheme, Maverick, if it’s announced, will likely contain few surprises. But will surely move the Mac more closely toward the interface of its hand-held devices—hopefully with less abruptness and more elegance than Microsoft’s disastrous Windows 8.0, recently slightly remedied by version 8.1. (Nobody’s even talking much about MSFT’s asinine and bewildering Office 365 with its incredibly illogical menuing system.)

Partial view of upcoming Macintosh Pro from recent image on Apple’s web site.

Slight possibility: the unveiling (finally) of the latest iteration of Apple’s Big Mac, the pro edition, which, as we recall, hasn’t seen an update since around 1987. Its dramatic round shape, at least in mockups, resembles some classic supercomputer exteriors and perhaps it will even offer some kind of impressive speed bump. But we shall see.

We’ll add an update to this report later today when the presser has concluded.

UPDATING: Confirming—OS X Mavericks now available FREE, apparently will run on even 2007 iMacs; Mac Pro tower introduced, boasting Intel Xeon E5, 4, 6, 8, or 12 core, fastest memory 1866 Mhz up to 64 GHz according to CNBC, available December starting at $2999; MacBook Pro updates including Intel Haswell chips already quietly introduced to iMac updates earlier this month and already in MacBook Air.

2nd UPDATE: Finally, new iPads: the iPad Air, lighter and thinner than every faster A7 processor, pricing $499-629. Plus, available later in November, a new iPad mini also with A7, a retina screen and a $399 price point. Previous mini will remain available for $299.

After spending much of the trading day in plus territory, Apple stock (AAPL) sold off as the press conference got underway. The stock is off roughly two points at 3:45 p.m. EDT, fifteen minutes prior to the market’s close which is typical of the action in this stock which has developed a persistant pattern of running up big time prior to a press event and then selling off sharply during or after the event.

Today’s stock market picks

Stocks will likely continue adding to their gains, at least until the end of the year, as investors get more confident that the market’s rally is sustainable, said Joe Bell, a senior equities analyst at Schaeffer’s Investment Research.

“We’ve had a pretty decent run here,” Bell said. “It wouldn’t surprise me if we saw the momentum slow a bit through the end of October and then have a nice rally through November and December.”

That’s a pretty safe bet, although things could get a touch wobbly early in November. A great many funds need to close their 2013 books at the end of October for accounting purposes, so there may be a rush this week to square up portfolios and do the usual illegal window dressing that shows investors their funds hold all the current “winners” and none of the perceived losers.

When that action drops off, there could be a lull in the action or a brief nasty drop.

Complicating all these fund maneuvers this week is the usual fun and games that goes along with futures contract expirations this week in the precious metals sector, an area that has clearly been the target of intense and somewhat mysterious manipulation for well over a year now. Historically, when the dollar loses value—which it’s clearly doing now—gold and silver rise in price as perceived hard currency hedges.

But over the past year, both commodities have persistently trended down even as the dollar loses value, ample evidence that something is going on among large trading institutions that may themselves be involved in fun and games in collusion with central banks. It’s hard to tell, particularly in silver, which has been intensely shorted at timely intervals over the last fourteen months.

In any event, the almost predictable monthly bear raids on these metals has made them a dubious investment either as bullion or via ETFs. We remain cautious in this sector, but the game could suddenly change as the year draws to a close. IAU and GLD are popular paper gold ETFs, while SLV remains the ETF for silver aficionados. For conspiracy theorists who prefer their ETFs to actually hold bullion, SGOL and PHYS for gold and SIVR for silver.

None of these is a recommendation. We’ve been in and out of them all throughout 2013, with mixed results at best and nasty losses at worst as it’s essentially impossible to trade manipulated markets successfully without fully grasping why normal market forces are being so completely evaded. We do hold a tiny position right now in SGOL, just because.

On the bullish side, oil continues to weaken, no thanks to the Obama EPA but with a big hat tip to America’s independent drillers and wildcatters who are extracting unprecedented amounts of fossil fuels from America’s vast shale deposits. Drillers and refiners continue to profit, as prices are still high, relatively speaking, but consumers are likely to have a few more dollars to spend on Christmas with prices dropping noticeably at the pumps.

There are a number of attractive names in the oil patch, with Devon (DVN), Occidental (OXY), and Conoco-Phillips (COP) looking good for longer-term holds if you don’t mind the usual volatility in this sector.

An unusual pick has surfaced in the currently wobbly telco sector. Case in point is Fair Point Communications (FRP), a Charlotte, NC-based largely rural telecommunications company left for dead after it was bankrupted by a poor deal it cut with Verizon—which has relentlessly and somewhat cynically sold off its rural landline businesses to smaller carriers, burdening them with a huge amount of debt.

Fair Point barely survived bankruptcy, but did emerge well over a year ago in better shape but still unprofitable. That said, its figures have been improving and its quarterly losses diminishing fairly regularly, save for the previous quarter. The stock has crept steadily up as well, even though it can’t currently afford to pay a dividend, unlike most telcos. A small position in this stock could produce nice capital gains over time for patient investors.

Frontier Communications (FTR) could be a better bet. It, too, picked up a good-sized chunk of Verizon’s rural business, but—possibly in light of the (FRP) debacle—arguably got a half-decent deal for a landline business that roughly doubled its size. The acquisition of the business has jammed FTR somewhat, having led to a dividend cut last year. But this cut was eventually viewed as a prudent move, enabling FTR to trip is post-acquisition debt at a brisker clip.

Better yet, FTR still pays a nearly nine percent dividend, and its cash flow looks like it will support that dividend for at least another year or two, so perhaps, at least for now, that stock is a better bet than FRP. Further, FTR has been highly aggressive in building out and promoting its rural DSL business and adding TV options, a good way to counter continuing landline losses as the digital revolution continues.

But again, both stocks are fairly speculative, so travel at your own risk. We own a small amount of FRP and have been in and out of FTR.

That’s enough for today. Bottom line: it’s okay to tiptoe back into this market little by little. We’d hate to miss the major part of a big rally here, particularly after an anticipated early-November dip.

But after the first of the year, 2014, budget and deficit deadlines will again heat up, so it’s best not to indulge in irrational exuberance. Slow and steady wins the race.

  –AP Contributed to this report

Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate. He currently holds small positions in SGOL and FRP, numerous ETFs, plus select bonds primarily purchased at the height of the 2008-2009 debacle.

Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.

Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.

References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.


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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17