Apple Rebounds in Flat Market

Wall Street Journal – Top Stories in Markets  December 6, 2012

Apple Rebounds in Flat Market

 “Shares of Apple AAPL +1.90% recovered from early losses and after the 6.4% tumble they took on Wednesday, the biggest one-day percentage drop in four years.”

Apple Building – Source: WSJ

Yesterday’s decline alone wiped off $39.4 billion worth of Apple’s market capitalization, or roughly the combined values of Yahoo Inc. YHOO +1.27%

“One real positive thing is the market isn’t falling apart even though its former leader isn’t leading,” said Mr. Colas, ConvergEx Group chief market strategist.(http://www.linkedin.com/pub/nick-colas/7/393/a62)

Mr. Colas, ConvergEx Group chief market strategist

“Apple shares dropped $37.05, or 6.4%, to $540.86 Wednesday as investors debated the reason for the steep drop. Some cited reports that a trading firm was requiring more collateral to trade in Apple shares. Others pointed to a report from research firm IDC that said rival Android tablets are gaining traction. And chart watchers noted Apple stock is approaching a “death cross,” when a stock’s 50-day moving average drops below the 200-day moving average. That is seen as a sign further declines could follow.”

“A slew of factors — declining investor confidence in the tech juggernaut, worries about Apple’s looming “death cross” and concerns about losing tablet market share to competitors such as Microsoft Corp MSFT +0.41%Amazon.com Inc. AMZN +0.24% Google Inc. GOOG +0.94% and Samsung — have weighed on the stock. This week the stock is hovering near its mid-November lows. Tax-related selling ahead of the fiscal cliff  has also hindered the stock.”

As Dow Jones’ Tomi Kilgore points out, the way Apple is trading right now suggests the stock’s 50-day moving average could cross below the 200-day moving average by the end of the week.

Apple chart 12-6-2012 – Source: WSJ

“We’ve already noted that over the last decade Apple’s stock has a fairly mixed track record when a death cross appears. The indicator — which takes place when the 50-day moving average crosses below the 200-day moving average — typically has negative short- and long-term implications for stocks and major indexes.”

“Options traders piled on to the sell off in Apple on Wednesday morning, and trading indicates they see more big swings ahead. Options trading indicates investors think this morning’s violent move could be repeated. Implied volatility in Apple shares, which reflects expectations for future stock moves, jumped more than 15%. That shows investors think the stock will see bigger swings over the next month–and it boosted the price of options contracts. Implied volatility is a key element of options pricing.”

My Comment: What goes up usually comes down. The big question is how much will the short term down trend continue? Not much to day trade these days but Apple.

Traders sit on hands for weeks, some think months – may continue for the year. I closed the trading room this week and thinking of taking more time off as volume is risky for new traders in early learning mode.

John McLaughlin, Day Trading Coach

http://www.daytraderswin.com/day-trading-coach-day-trading-guide-day-trading-advice-2/ 

More Info:http://video.cnbc.com/gallery/?video=3000133706  

Apple CEO Tim Cook – interview by Tim Cook, NBC (“Made in America”)

_______________________________________________________