THE MORNING LINE
AAPL Back Again as an Engine of Illusory Wealth
You’ve got to hand it to DaBoyz for reviving Apple as a ‘wealth’-effect dynamo. The company couldn’t innovate its way out of a wet paper bag, and it doesn’t even have a horse in the AI race. And yet, the stock recently lurched back to life, emulating those two bull-market superstars, Microsoft and Nvidia. Indeed, any investor who held shares in the company last week, including Vanguard, BlackRock, Berkshire Hathaway and approximately 25,000 other lucky investors, became significantly wealthier on paper without lifting a finger. Rising sharply on gap openings last Wednesday and Thursday (see chart), and on a nasty short-squeeze Friday for good measure, the Cupertino-based seller of iPhones added nearly $500 billion to the world’s store of illusory wealth.
The Element of Surprise
As I’ve explained here before, almost no stock changes hands in opening-bar gaps, and what little actual buying occurs comes almost entirely from short covering. In this instance, AAPL AAPL AAPL AAPL AAPL Microsoft ended last Tuesday’s session at around $203 per share. Then news came out after the close that they had sold quite a few more iPhones than benighted analysts had expected. It didn’t matter that the flurry of phone-buying could have been a one-shot effect caused by consumers trying to get ahead of new tariffs.
All that was needed to goose AAPL skyward was the element of surprise. After the earnings beat, the stock’s clever handlers lost no time working their end of the scam. By simply pulling their offers overnight and on Wednesday’s opening, they enabled freaked-out bears to do all the lifting.
Rotation Is Costless
It’s easy to underestimate the crooks who ply this game. Although we know they routinely rotate money from one sector to the next in order to push stocks higher with relatively small outlays, we sometimes overlook that they can do the same trick with the handful of megastocks that alone are capable of creating trillions of dollars of gaseous wealth in a trice. Using Apple shares, which had been moribund for a year, they simply waited until the company’s tired story became sufficiently positive to trigger off a rip-roaring short squeeze.
If this sounds like a perpetual motion machine capable of wafting stocks higher more or less forever, we know the truth. For in fact, bear markets eventually do happen, invariably when everything looks sunniest.
Rick's Free Picks
$GDXJ – Junior Gold Miner ETF (Last:72.23)
This proxy for gold exploration stocks has had quite a run-up this year. Most recently it exceeded a 72.23 target first disseminated here a long time ago. To come up with a higher projection, I had to shift the point ‘A’ low from 2020’s watershed bottom at 19.62 to the
$TLT – Lehman Bond ETF (Last:87.31)
TLT’s performance over the last four years has grown increasingly painful to watch, and there are no clear signs this is about to end. In fact, a little more downside remains to complete the pattern shown to D=80.84. Alternatively, I’d need to see an uncorrected thrust above both of the
CLQ25 – August Crude (Last:66.71)
Right on cue, Bloomberg.com splashed an article on its front page over the weekend explaining why the price of crude has been so subdued in the face of potentially severe supply disruptions in the Middle East. Turns out the world is awash in oil, the article explained — not just
TLT – Lehman Bond ETF (Last:84.55)
We should know soon whether Silver’s mini-explosion upward, the second in three months, is just another false start. From a Hidden Pivot perspective, the selloff of the last two weeks is not as bearish as it seems. It triggered an attractive ‘mechanical’ buy on Monday when it touched the green
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