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I like to think of Apple as a proxy to the overall market. It’s certainly in a class by itself, making up over 15% of the Nasdaq, 6% of the S&P, and while it should be listed on the Dow too, it seems the price weighted index would have to make serious concessions to put it there.
Well yesterday, Apple broke through massive support that it had been toying with for the past couple weeks. While the rest of the market was in free fall, Apple hung tough. And who would have expected otherwise? Apple Is an amazing company and makes money whether the market is up or down… so what gives?
It would seem that traders and investors have recognized that the calamity going on over in Greece, Spain and the rest of the Eurozone is just too much to be a speculator on Apple’s continued growth. And while there’s little doubt that Apple is failing, the stock is another story. Investors and traders trust government treasuries more than Apple… now that’s kinda funny, cuz I always thought if only other companies, and this country acted more like Apple, we’d never would have had this recession and world-wide brink of depression in the first place.
So with Apple being such a heavy weight in the Nasdaq, and Apple not feeling well, that makes the Nasdaq sick. And when the Nasdaq is sick, the rest of the market can’t be in too good shape either.
So Apple breaks massive support at 555, it looks like the next level is 490. The S&P is in free fall, breaking massive at 1340, not it looks to 1305 as the next level. That’s huge, but does it mean we’re slipping into a bear market?
Well if you can’t depend on Apple, what can you depend on? The Greeks? If Apple can fall on Greece thumbing its nose at debt obligations, and Italy’s bond yields rising above the boiling point, then how can you have confidence in the rest of the market? If the strongest company in the world buckles its knees on Euro trash, what can we expect?
See the thing is that Apple is a US company… obviously. Which means it trades in US dollars. And all this market trouble is causing the US dollar to rise, and at the same time, every other currency is dropping like a falling knife. This makes Apple’s products incredibly expensive around the world. This has to put a damper on Apple’s sales, at least that’s the thinking of investors, and that’s why they’re abandoning the all things iMaker.
The Euro Dollar has broken massive support and is on its way to parity with the US dollar… the only good that I can see coming out of this mess is that trips to Europe this summer will be at incredible discounts. Your US dollar will go a lot further than before. Nearly 20% better in just the past few weeks.
So, dump Apple stock, buy bonds, forget about the market until the summer is over and take a trip. I suggest Switzerland. It’s beautiful this time of year, and one of the few countries that probably won’t erupt in violence and financial mayhem.
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