We had relatively narrow range trading for the second day in a row. Normally I’d be expecting this range contraction to lead to an expansion but it’s hard to expect that when these shrunken ranges are still 3 to 4% moves. So unless some big news breaks I think the ranges will continue to shrink.
It’s been three months since I last posted about two of the poster children of the last bull run, GOOG and AAPL. Back in July I said that I thought they had seen their best days. I didn’t like all the overhead resistance on them at that time and now they’ve got a ton more overhead to deal with.
Back in July I was a bit more bearish on Google than Apple but Apple has actually performed much worse. It’s down over 40% since then vs. about 20% for Google. One thing I mentioned in July was that Apple was over-owned. I’m more convinced of that now than ever. In addition to that, many of those owners have very unrealistic expectations. It seems that every week I hear the guys on the Mac Break Weekly podcast talk about how AAPL is so cheap here. They give all these reasons why they think the stock should at least go back to 200. But I never hear anybody question whether that $200 price was realistic. The stock has made two round trips from 116 to near 200 in the last year. Who’s to say which price in that wide range is the proper price? And if you assume that the super-levered financial institutions were the ones propping the stock up you have to wonder if that kind of money will ever be poured back into AAPL.
Here’s Apple’s chart. It had a strong upside reversal after hours to end the session just under $104. It’s a good psychological sign for it to be back over $100 but I think the $120 level is the one that’s technically important. That should be a tough nut to crack.
Google has been struggling with its September downtrend each of the last three sessions since they reported earnings. I think GOOG has many of the same psychological and ownership (levered hedge funds?) issues as Apple.
Getting whipsawed on the short-term trends.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Down | Down | Down |
| Intermediate | Down | Down | Down |
| Short-term | Down(-) | Lat(-) | Lat(-) |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Interesting analysis re: AAPL. Aside from you and I driving their success this quarter, I agree that $120 is the area to watch especially with the breakaway gap down on 09/29. It is amazing to see that decline from mid-August…AAPL fell off a cliff.
On another note, YHOO, BRCM as well as AAPL were up AH but I noticed the futures were drifting down tonight…nothing major, just a drift. That could change by morning, of course…but that rollover today and the action around 9,000 seems a little ominous.
It sure was an amazing decline. It’s like the market split the stock for them. Too bad most of the fan boys never saw it coming.
I don’t understand this whole “gold as a flight to safety” thing. Doesn’t declining gold (over the long-term, of course), support Prechter’s Kondratieff-esque case for deflation? Gold prices increased during the Great Depression, but back then, gold was currency. Now, during inflation, we’d expect gold to go up, and during deflation, we’d expect gold to go down. This credit crunch is remarkably Kondratieff.