Did the Market Jump the Shark? No Way

We are in a world of doody right now.  $AAPL is falling apart, the bears say 575 or lower and the bulls hope on hope that tomorrow’s earnings report will save them. I don’t have a clue, but I can see $AAPL testing those levels if this tape rolls over some more. Wouldn’t it be trading at like three times earnings though if it did? Apple is a year into Steve Jobs two year blueprint, I haven’t seen a whole lot that makes my leg tingle other than the same product repackaged into different shapes and sizes.

I’m not an Apple fan boy as many are, but I do love the product and trade the stock. My daughter turns eighteen this weekend and gets a new iBook. I just wonder though if it hasn’t already become a commodity (as all technology eventually does). $MSFT and $INTC did. They were the balls once too. The stock is silly cheap based on cash and other things, but maybe the stock isn’t getting the multiple of earnings because people know that it is now just a value play. Who knows? I’m  not that smart.

I’m not an uber geek, but I fooled around with my buddy’s Samsung Galaxy today, great phone, does basically the same stuff, and it  has a GPS feature that actually works. I am not denigrating $AAPL, I am simply being devils advocate here. If I wrote this post at 700 I would have looked really smart.

This isn’t about $AAPL though, I wanted to talk about the market in general. $AAPL is important though, because its 20% of the Nasdaq and a nice chunk of the S&P. From a trading slant, I never wanted Apple to split, I thought it would kill the integrity of its trading flow, but in fairness to the market and better flow in the indices, it probably should. The stock can cut both ways, and when it goes down it will leave a mark. Thing is, it really doesn’t go down, does it? Now it is.

On the general market front, things look sketchy at best. Two guys that I respect (I basically listen to no one) as I do my own work, are bearish.

Tom DeMark came out yesterday and said that the highs for the year were put in last week, and the folks over at McClellan are bearish. The latter has a much shorter time frame though.

I am somewhere in between. I do as much work as they do and have probably been as right or wrong as the two of them.  The $QQQ broke its 50 day moving average on October 19, but $AAPL broke its 50 day on October 5th, so that was a big “tell”.

The S&P broke but “kinda-sorta” held its 50 day moving average, but collapsed and broke it hard today. The DOW broke its 50 day moving average yesterday, but put in a good effort (like the SPX) and closed at the line. Today it collapsed.

The Russell 2000 broke its 50 day last week, but held its 200 day moving average today, which I like, and as a result, I am long $TNA.

My feeling is that this is merely a correction. My feeling is that if you aren’t nibbling here, you will miss an epic move higher between now and year end. All the good is on the come.

Technology has been massacred and there is great value. Look at $IBM and $AAPL (after earnings tomorrow). Stay away from crap like $DELL and $HPQ.

Coal is going higher, yet it has had a great move, so look at $BTU, $CNX, $ANR $WLT and $ACI on  any further weakness.

The $XLE names are getting really cheap again. Look at names like  $APA, $CVX and $OXY. I bought $ERX today.

My worst case scenario for the S&P 1370, it may not tag it though. The rally will be epic. Layer in, and buy the dip.

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Good look tomorrow


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