AAPL December 2014 vs. January 2015

People say that people are waiting until the new year to sell AAPL… which makes some sense in that capital gains can be deferred by a year… but a few things trouble me about this conventional wisdom.

First, your average AAPL investor is in it for the long haul… so selling, regardless of the timing, is generally something they don’t consider.

Next, we had three big dips in December… the flash crash… a big one a few weeks ago (with AAPL trading down to 106)… and the one we just finished the 2014 with (to 110).  Telling, of course, that each successive dip was shallower (as a percentage) than the previous dip.

So here’s what I think is happening:  Big funds cashed out of AAPL in December… so they could lock in profits… so they could lock in their bonuses.

And here’s what I think is going to happen:  While there might actually be some minor tax-planned selling in January, I believe those same funds that sold AAPL in December (to lock in bonuses) won’t be able to stay away from the anticipation of blow out earnings for AAPL in January.

So, look for AAPL to rise in January.

P.S.  Hope next year is the very best 2015 ever for everyone!

Inaccurate Coupling

Oil has been dragging stocks down.  Incorrectly.  Smart people are getting confused by what to make of “supply & demand” these days… they assume there is somehow less demand and that’s signaling a global slowdown.

Rubbish.

It’s because there is more supply… which could signal the beginning of the end of the horrible, terrible, monopolistic choke-hold the Middle East has held the world in.

Not only is that good news… but that’s GREAT news.

Oil is a proxy for energy… and the cost of energy affects the cost of EVERYTHING.

So when the price of oil goes down because we have new sources of supply, a several things happen:

(1)  The cost of EVERYTHING goes down

(2)  People have more money in their pockets to save & spend… and goodness knows the world spends

(3)  More spending means more corporate profits

Think of it this way:  Instead of paying a trillion dollars a year to the Middle East… we get to keep a lot of that money to save & spend on ourselves.

How in the world can anyone think that’s bad?

UPDATE:  Maybe this whole post is moot?  Maybe the market was just worried about the Fed… because since yesterday’s dovish comments, the stock market has gone up… while oil has continued to go down… to me an appropriate uncoupling that even Gwyneth Paltrow would be proud of. <smile>

Wow… AAPL Flash Crashed This Morning (Meaning, It’s Already Recovering)

Wow.  AAPL flash crashed at 6:51am pst this morning.

Within a minute, AAPL dropped almost 8 points… an almost 7% decline in the highest-valued company in the world.  That deserves a second wow.

It wasn’t based on news…

… because (1) the news on AAPL today was neutral.  While Adam Parker of Morgan Stanley was conservatively trimming his position in all of tech*, including AAPL… Barclays was raising its target to $140…

… and (2) all the news came out before the market opened… so presumably AAPL should have seen selling pressure out-of-the-gate, which it did not.

Instead, all the major selling happened during a 60-second slice of time… at precisely 6:51am pst… clearly the fingerprint of algorithmic trading.

There is chatter that the dive happened because someone tried to sell over six million shares at once… that’s about 10% of AAPL’s average daily volume… so that could have indeed mucked things up.

However, let’s be real:  That’s about a $700 MILLION dollar order… I’m pretty sure someone isn’t panic selling that by themselves on E*Trade… every professional in the world would know to s-l-0-w-l-y sell those shares over a period of time so as NOT to spook the market and therefore maximize the sales price.

I think this gets chalked up to a flash crash… a horrible, gut-wrenching by-product of modern-day “high frequency trading”… essentially computers trying to outdo computers making trades.  Not for the faint of heart.

Note that AAPL had cut its losses by more than half at the close… and if something truly systemic doesn’t get announced (as in, Apple issuing a profit warning or something), then we could see it retrace upward, maybe even this week… and helping this is yet another target raise tonight, this time by Canaccord Genuity (to $135 from $120)… so a nice potential trading pop may be set up for those that think that way.

*  Interesting that just last week Katy Huberty — of the very same Morgan Stanley — raised AAPL’s target to $126.  The lesson?  A bank can have multiple opinion makers… so it’s important to pay attention!