Stock:
Symbol Lookup
Register | Login
...
History
...
...

Pre Market | Dow Jones | Gold | Newsletters | Learn


One Rotten 'Apple' Spoils The Barrel

Thursday, January 24, 2013 8:39 AM
jason bond picks By Jason Bond of JasonBondPicks.com Equity markets have had an excellent run over the past few weeks, with the S&P 500 and Dow Jones climbing to multi-year highs. However, a correction could be on its way as the S&P 500 now has been in overbought territory for a couple of weeks now.

Robust Earnings Lift Sentiment

In the last one month, the S&P 500 has gained 4.78%, the Dow Jones has gained 4.87%, and the Nasdaq has gained 4.68%. Stocks have been gaining momentum as the earnings season has turned out to better than expected so far. However, it must be noted that expectations ahead of the earnings season had been quite low anyways. Also, some robust U.S. and global economic data has lifted investors’ sentiment. >>> Join my FREE email list <<< The last minute fiscal cliff deal also boosted sentiment even though the deal was only partial and lawmakers are still to find a resolution to long-term spending cuts. Another major concern has been the debt ceiling issue, however, House Republicans on Wednesday voted to suspend enforcement of the debt ceiling through May 18th.

Surprisingly Resilient

While House Republicans have voted to suspend enforcement of the debt ceiling through May 18th, a concrete deal is yet to be done. Also, the U.S. economy still faces the prospect of significant automatic spending cuts on March 1. As I said, the earnings season has been better than expected; however, the bar was set too low in the first place. And while the economy is improving, the recovery is still in nascent stage. Despite all these factors, markets have been surprisingly resilient. Technical indicators have been suggesting a pullback for a while. Also, with the S&P 500 and Dow Jones climbing to multi-year highs, one would expect a correction. However, it seems right now that the thinking among investors is that nothing can bring down the market.

VIX Below Historical Average, Gold Prices Flat

The Volatility Index or VIX, which measures the implied volatility of the S&P 500 index options, has been in oversold territory and trading well below its historic average of 20. The VIX is trading at levels last seen before the financial crisis. The iPath S&P 500 VIX Short Term Futures TM ETN (NYSE:VXX) has fallen nearly 30% in the last one month. VXX hit an all-time low of $22.55 on Wednesday. Gold prices have been trading in a tight range for a while now as investors continue to take safe-haven bets off the table. Both the VIX and gold suggest that it is a good time to get into riskier assets; however, investors have been too complacent. As I said, the S&P 500 has been overbought territory and a correction is on its way. So what could push markets lower?

Reason to Dip

Equity markets have been overbought and are looking for a reason to dip. On Wednesday, market participants got that reason. After market close on Wednesday, Apple Inc. (NASDAQ:AAPL), the Cupertino, California-based technology giant, reported disappointing quarterly results. The stock plunged nearly 10% in after-hours trading on Wednesday as investors digested the company’s first-quarter results. Although Apple reported record quarterly results, the company’s revenue fell short of expectations. Analysts and investors were also disappointed by the company’s outlook. Apple is likely to drag the broad market lower in trading today. However, I believe that the correction is much needed. At current levels, stocks look expensive and a sharp correction will bring markets to a more reasonable level. By Jason Bond of JasonBondPicks.com
PRINT

FREE Options Trading Lessons
I'll show you how to unlock HUGE Gains with Options Trading
Let's make 2014 the year you get RICH!

Latest Headlines

NY Fed found serious problems at Deutsche Bank's U.S. arms: WSJNY Fed found serious problems at Deutsche Bank's U.S. arms: WSJ
(Reuters) - The Federal Reserve Bank of New York has found serious problems in Deutsche Bank AG`s U.S. operations, including shoddy financial reporting, inadequate auditing and oversight and weak tech...
Apple revenue lags Street forecastsApple revenue lags Street forecasts
SAN FRANCISCO (Reuters) - Apple Inc posted a smaller-than-expected 6 percent rise in quarterly revenue on Tuesday, after selling 35.2 million iPhones in an increasingly competitive smartphone market. ...
Apple revenue lags Street forecastsApple revenue lags Street forecasts
SAN FRANCISCO (Reuters) - Apple Inc posted a worse-than-expected 6 percent rise in quarterly revenue on Tuesday, after selling 35.2 million iPhones into an increasingly competitive smartphone market. ...
Facebook's Zuckerberg to testify at N.Y. forgery trial: prosecutorsFacebook's Zuckerberg to testify at N.Y. forgery trial: prosecutors
NEW YORK (Reuters) - The government will call Mark Zuckerberg to testify against an upstate New York man accused of trying to cheat the billionaire founder of Facebook Inc out of half his stake in t...
Microsoft revenue rises, profit falls as Nokia absorbedMicrosoft revenue rises, profit falls as Nokia absorbed
SEATTLE (Reuters) - Microsoft Corp said on Tuesday its fiscal fourth-quarter revenue rose, but its profit fell, partly due to the effect of incorporating the handset business of Nokia, which it acquir...

Loading Headlines...
 

Stock Market

Track the stock market today with the latest news and information on all things investing! Watch your stocks perform throughout the day and watch the breaking stock market news.

Feedback | disclaimer | privacy policy

Stock Market News

The Stock Market is ever changing. Keep up on your stock market news.

Stock Market Newsletters

Read up on your favorite stock market newsletters.


Learn the Stock Market

Sharper your stock trading skills with our stock market education section.