Yesterday's market: All tricks, no treats

Bernanke exit rumor, more bad earnings, Apple swoon worrying.

WASHINGTON, October 24, 2012 – Hoo-boy, was yesterday’s market action a stinker! We’d opined that it would be a down day, but that was an understatement. As Halloween approaches, there were no Treats to compensate for this nasty Trick. 

We gave a batch of advance reasons for yesterday’s downdraft in our previous column, all of them valid. But after we filed our story we learned that Uncle Ben Bernanke will likely not be seeking a third term—maybe because he and others are smelling a Romney win in November, with Romney already promising not to reappoint the current Fed Chair. 

Or maybe Uncle Ben is plum tuckered out, having spent the entirety of his last four years either fighting for re-appointment or keeping his finger in the fiscal dike 24/7 given Congress’ stubborn dereliction of duty in passing even one new budget during the Obama Administration. 

In any event, the market certainly didn’t like that news, with its implication that QE3 might come to an “unexpected” end. So the sellers walloped everything including onetime tech darling Apple, which got beaten in the morning, rallied magnificently as its new products were announced, and then got compacted like an old Chevy in a car-crushing machine late in the afternoon. 

We actually took an adventure in Apple options, hoping to take a brief ride up. Unfortunately, while we were looking away from our machine, the bone crushers took over and pancaked our calls, giving us a sickening loss in moments. That’s volatility for you. We’re still in the options and are hoping for some salvation today, as futures across the boards are looking a lot more positive. We should have heeded our own general advice on those options, though, and stayed away, as we have with everything else. 

The NASDAQ itself, which is where Apple (APPL) lives, dropped below an important support level (3000) for the first time since August 6, according to Investors Business Daily (IBD—no link, behind pay wall). Apple makes up a good 11% or so of that index, so hence the weakness in spite of recoveries in other tech darlings like Google (GOOG), which experienced its own scalping last week when it reported lousy earnings. 

The Apple product introductions were nothing but good news to Apple fans. The long-anticipated smaller iPad, now dubbed the “iPad Mini” is a slick little work of art, boasting a 7.9-inch display as opposed to the regular iPad’s 9.7-inch screen. According to Apple marketing dude Phil Schiller, the iPad Mini is way cooler than the 7-inch tablets running on Google’s Android OS with regard to utility and quality. Plus the Mini’s screen area is impressively large. 

Apple also announced long-awaited new iMac models—the Maven seriously needs one to replace his 2007-vintage iMac dinosaur—new MacBook laptops and, surprise, a completely refreshed regular iPad which gooses processing and graphics speed courtesy of its new-generation A6X chip. The A6X purportedly gets up to twice the speed of its earlier sibling.

But wait, there’s more! The iPad’s camera gets improvements and Wi-Fi is supposed to be 2X faster than on the previous model which came out only seven months ago. 

All this sounds pretty good to the Maven, an Apple product owner since about 1983. But perennial bear Doug Kass was already making the rounds on TV yesterday claiming Apple’s glory days are behind it. Yeah, sure. It is certainly hard to figure out what the company will do next, new product-wise. But we suspect it won’t be joining Microsoft in the LaBrea Tar Pit of boring tech giants for at least a few more years. 

The market, though, seemed more attuned yesterday to the Kass point of view, shaving Apple’s stock price by about 3% at its 613.36 close. There’ll probably be a nice reaction bounce today. Or not. 

Meanwhile, as we’ve already mentioned, stocks should open up smartly this morning. But as recent history tells us, it’s still Trick or Treat time. Nobody knows where this market will close.


Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate. He continues to own a position in IAU and is (regretfully) long Apple (AAPL) January calls.

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.

Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.

Follow Terry on Twitter @terryp17


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Terry Ponick

Now writing on investing, politics, music, movies and theater for the Washington Times Communities, Terry was formerly the longtime music and culture critic for the Washington Times print edition (1994-2009) before moving online with Communities in 2010.  



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