Apple

We wrote here recently that as Apple shares go, so goes the U.S. stock market. How has the stock fared?  Last week there was quite a bit of excitement when the broad-tossers who manipulate the stock for a living short-squeezed the bejeezus out of it after the close, leveraging a strong earnings report that could have surprised only Wall Street’s clueless analysts. Moments after the news hit the tape, AAPL gapped up 9% in a blink, recouping two-thirds of the losses it had suffered the previous two weeks, when it plummeted $90 from an all-time high at $644.  From a technical standpoint, what was interesting about the  decline is that it reversed from within 29 cents of a “Hidden Pivot” correction target we’d disseminated to subscribers a few days earlier. For if the stock had exceeded that number by more than a couple of dollars, it would have held bearish implications for the short-to-intermediate-term. However, because the pivot survived, there was no way to judge the mettle of bulls until Apple rallied out of the hole. This it did, in spectacular fashion, with last week’s gargantuan short squeeze. The goosing instantly added $50 of value to each share of the world’s most valuable company. Nothing like a little volatility to keep the crowds coming back for more, right?  Putting aside the comical spectacle of a $600 billion whale flopping around wildly in NASDAQ’s bathtub, the rally put Apple shares in play once again as a bull-market bellwether. That said, we have our doubts that new all-time highs will be achieved any time soon. Notice in the chart how last week’s gap-up rally, powerful as it was, narrowly failed to surpass peak #1.  If buyers had more guts, shouldn’t they have taken on that last, niggling resistance before settling back triumphantly?

With the world in the throes of an unprecedented credit blowout, gold’s failure to crack $2000 barrier can sometimes seem mystifying – the moreso as the correction begun in 2011 stretches on, now into an eighth month. Gold has acted more like wheat or corn than like money. Shouldn’t it reflect the fact that dollars, euros and yen are available to an insatiable group of borrowers, mainly large banks, at no cost and in practically unlimited quantities? Indeed. And yet, lately, gold has been unable to muster the ire, even, of crude oil, which appears to be gathering thrust for its first foray above $120 since 2008.  Meanwhile, Comex Gold has been lazily backing and filling since last September. If gold is not oblivious to the steady and relentless destruction of currencies, it seems unpersuaded that this is what the central banks are accomplishing by design. From a purely technical standpoint, gold’s reluctance to get in gear with crude, and to start acting like it knows what the central banks are up to, is not so mysterious. Let me explain.  I have written here many times that it is not bullish buying that drives stocks relentlessly higher in bull markets, but short-covering by bears. This was a dynamic I got to observe first-hand in the dozen or so years I spent on the trading floor of the Pacific Exchange. While bulls often rationalize their buying strategies by citing “fundamentals,” they probably understand at a gut level that PE ratios are no more useful a predictor of where a stock will be trading in six months than tea leaves. Small wonder, then, that bullish sentiment alone cannot summon the kind of torpedoes-be-damned buying it takes to drive shares through massive levels of supply.  But short-covering can, since the buying is rooted

Suh-prize, suh-prize. Someone posting in the forum said Apple was up $40 in after-hours trading, although I cannot confirm it at the moment using my deaf-dumb-blind-and-recalcitrant Tradestation application. If true, it would have no bearing on today's wait-and-see tout for the stock.  Technically speaking, the rally could augur another six weeks of false Spring for U.S. stocks.

An amusing coincidence: I was posting to the Rick’s Picks forum a moment ago about how exchange trading has come to resemble a sleazy carnival operation, and lo, the E-Mini S&Ps have shot up six points in mere seconds. This was an after-hours move – the best time to stage these heists, since there is little legitimate buying or selling to get in the way of the perpetrators. I don’t wish to insult carny operators by comparing them to exchange dealers and market makers, by the way, since the guys and gals who work the midway at least come face to face with the rubes they are ripping off.  Not in the world of electronic trading, though.  The pros who are doing the fleecing operate under a veil of secrecy that can be lifted only by securities regulators or the FBI. The forum thread concered trading against phantom bids and offers that seem to be there only when you don’t need them.  Café Americain’s Jesse had posted the following at his own blog: “I am not trading nearly as frequently or aggressively as in the past because a) I am getting older b) these markets are almost ridiculous. It’s like playing cards with the little girls. If I put in an order for a few thousand shares, the liquidity from a large offered set of multiple positions evaporates instantly and I close on maybe 100 shares. If I offer to buy above market but below ask I get ten ‘friends’ appearing instantly along with my bid.” Phantom Markets Just so. This has been our experience as well, mainly in the equity option markets. On a Level 2 trading screen, one might see 5000-up bids and offers for call options that rarely trade. So who would be offering thousands of them,

We are tracking the shares of Apple closely, since the vigor of its bounce from within a figurative hair of a 555.29 Hidden Pivot target that was recently achieved can tell us whether the stock market as a whole might be rolling over.  Check out the chart accompanying today's AAPL tout for further, precise details.

Over the three years that the Mother of All Bear Rallies has chugged steadily higher, the tedium of gratuitous ups and downs such as we have endured lately has always implied consolidation. In each and every instance, the broad averages marked time until there was sufficient good news -- usually the latest bailout fraud perpetrated by the European Central Bank --to trigger off the kind of short-covering that alone can drive stocks through ceilings of supply. Will it be different this time? My guess is that the answer will be found by closely monitoring the vital signs of that Mother of All Bellwethers, Apple, which at recent, peak valuations was the largest company in the world. Subscribers and permabears pay heed:  Rick's Picks' 'Apple Watch' has begun. Click here to follow the excitement in real time with a free trial subscription to Rick's Picks.

[Our friend Doug Behnfield, the savviest financial advisor we know, is skeptical about the dividend mania that has captivated Wall Street of late. In the essay below he explains why investors seduced by dividend-paying stocks may be overlooking more-than-offsetting risks and better opportunities. Doug works exclusively with high-net-worth individuals, many of whom are undoubtedly grateful for his prescient skew toward Treasury paper since the beginning of last year. To contact him about his services, click here and I will forward your message. RA] As you read this essay, keep Bob Farrell’s Rule #7 well in mind: "Markets are strongest when they are broad and weakest when they narrow to a handful of blue chip names." Most stock market participants can remember back to 2000 if they really try. It was common back then for typically risk-averse investors (like retirees) to be insistent that half of their portfolios consisted of Microsoft, Intel, Cisco and Dell. The price of each of these stocks had gone parabolic and none of them paid dividends, which was a good thing because that left them with all those earnings to plow back into their business. If the investor needed to buy groceries, they could just sell a few shares for cash flow. My, how things have changed. Today, "dividend paying stocks" are all the rage. McDonalds, Proctor & Gamble and Johnson & Johnson are emblematic. Apple has just begun getting into the act by declaring its first dividend and Intel and Microsoft are now on the list after ramping up dividends soon after the tech stock meltdown in the early 2000s. What these companies have in common is that they are blue chip names and they have taken on a "one decision" aura. For example, Proctor & Gamble has raised its dividend every year for 55

You gotta give DaBoyz credit for turning stocks around yesterday, since buyers appeared to have taken the day off. Nor was there much bullish energy as the day wore on – only the nervous drum beat of short-covering ahead of the final trading day of Q1.  It was all window dressing, to be sure, and although the Dow Industrials ended the day 20 points higher, the modest gain belied the dark magic that eventually spirited the blue chip average into positive territory.  After being down as much as 93 points early in the session, the Indoos began to inch their way higher around noon.  Of course, most of the gains came during the final hour, as is so often the case. Bears apparently had second thoughts about trusting Friday to be mellow, especially a Friday coinciding with the end of a fiscal quarter. With earnings growth apparently slowing down, will the broad averages continue to waft higher in the weeks ahead?  Perhaps. Whatever your view on the economy, keep in mind that there is no story, even weakening earnings, that cannot be spun bullishly. The optimists would interpret this as meaning companies have hit a wall on profit margins and will soon start hiring to keep up with sales. A darker view would hold that stagnant household incomes and still-falling home prices are about to smother the consumption side of growth. Yes, we too have noticed that credit card teaser rates are back down to 0.0%, sometimes with no origination fee. But the asset growth on which this seductive scam has always thrived is simply not there. ‘Time for Defense’ Meanwhile, not everyone thinks that higher stock prices are baked in the cake for Q2.  “Traders and investors should use Friday, March 30, to get defensive,” read an e-mail we

Can anyone remember when Apple shares were trading for around four bucks? We can, because at the time, in 1997, we were so certain the company was headed for oblivion that we made it the subject of the weekly column we wrote for the Sunday San Francisco Examiner. Back then, it looked as though Apple had finally lost the battle for market share to Microsoft. This, despite the fact that Macs were superior to PCs in nearly every way save cost and, almost fatally, software development.  Even though Macs were the computer of choice outside of the workplace, and although students and users in creative fields were particularly loyal to the brand, by late 1997 Apple’s market share had slipped below 4 percent, down from 7 percent a year earlier. This placed the company eighth among U.S. computer manufacturers. “Think Different” was the company’s slogan then, but unless they did some out-of-the-box thinking themselves, there would be no future. Fast forward to today. Amid a swell of hubris on the announcement of a $2.65 quarterly dividend and a $10 billion stock buy-back plan, Apple shares finally cracked $600.  A $5,000 investment in 1997 would be worth $750,000 today.  We should have realized the company was bottoming when we were deluged with hate mail in the days after the Examiner column ran. Hell hath no fury, evidently, like a Mac user scorned.  While our essays ordinarily elicited no more than three or four dozen responses, this time hundreds of letters and e-mails poured in.  The milder ones merely assailed us for being blind to the Mac’s many virtues.  But quite a few implied that we’d burn in hell, or worse, for merely doubting that Apple would survive. Who could doubt they would with so many hard-core fans ready to come to