Did AAPL Signal a Slowdown in Consumer Spending?
The market collapsed last week. For the past month, I've mentioned how difficult it will be for SPX to break the 1250 hump. And during the first half of September the bulls made a desperate attempt to hurdle the 1250 level.
The bulls managed to bring the SPX within a few percent of 1250 just hours before Ben Bernanke was scheduled to speak. And clearly, the bulls wanted (and were ready to get) QE3. But instead of QE3, Bennie and the Feds announced "Operation Twist."
And investors in the market shouted "SELL!"
Meanwhile, the trouble in Europe also intensified this month. And honestly, the financial woes in Europe are a far bigger concern to investors at the moment.
Despite the pessimism in the euro zone, I remain optimistic that in the short term 1100 will hold and SPX will climb to 1155, maybe 1175. But unless the EU comes up with a quick and drastic solution, SPX will hit 1050, my secondary price target, this year, and likely next month.
The indices in Europe are jacked this morning. I think leadership in Europe knows they need to bring out the bazooka, and the market is anticipating that they will. At the moment, it's all rumors and speculation. But that should be enough to get the market moving positive this morning.
The ongoing crisis and resolution in Europe will continue to dominate the news this week. I tend to doubt that ECB officials will announce a plan, but look for continued rumors of a massive solution to keep flying around.
Economic data from the U.S. is slow this week, with only Wednesday's durable goods orders being important enough to focus on. Remember, it was the miss from durable goods in the spring that kick-started the market moving lower this summer.
In addition to the decline in the stock market, gold has also sold-off heavily. A few weeks ago I mentioned that I was short SPDR Gold Trust ETF (NYSE:GLD). My bearish GLD trade ended Friday however. And I actually think gold should move higher in the very near term. But there will likely be another opportunity to be bearish on gold again.
Something else to keep our eye on over the next few months is breaking news that Apple (NASDAQ:AAPL) cut its orders for iPad parts by 25% last week. At this point we don't know why. Analysts that follow AAPL have not revised their iPad shipments lower, but analysts are idiots, and corrupt.
In this case though, the inaction of analysts might be accurate. It's hard to believe AAPL would see a big decrease in iPad demand, especially a 25% revision. The more likely explanations are AAPL is building a new product that makes the old one obsolete, or AAPL over-ordered the parts to lock up that supply chain for the competition.
Also, our company is having its annual corporate retreat this week. While I will be working normal business hours during that time, I will also be in lots of meetings. Accordingly, it may take me an extra few days to respond to subscriber email.
The week should be very productive, and I hope to come away with new product features, and I sincerely do welcome your suggestions tradedesk@trademasterstocks.com. I still intend to make trades this week, but I also encourage you to watch the TWO weekend videos and follow those trade setups as well. Those videos can be found here.
