So investors should start betting on Apple and the stock market now

Sometimes it pays not to dismiss market lore. They said September is usually bad. You were right.

The S&P 500 SPX,
-1.51%
will come in with a 7.95% loss on the last trading day of the month. Inflation concerns and higher borrowing costs – not to mention a bond crisis in the UK – took their toll.

But if traders stick to seasonality, there is good news. October is enjoying an average gain of 1% and the coming month is up 1.8% after a loss of 7% or more in September, according to Dow Jones Market Data.

But is that possible without the help of the great beasts?

Consider Apple AAPL,
-3.00%,
which requires a weighting of approximately 7% in the S%P 500. There are days when the market can shrug off the iPhone maker’s weakness, but they’re rare. Thursday’s market slump came after Bank of America downgraded Apple and the stock fell to a near 3-month low.

Don’t worry, says Mark Newton, head of technical strategy at Fundstrat, Apple can likely bottom next week — if another rise in yields and the dollar pushes the broader stock market lower — but then it’ll be trending higher through mid-November.

“I continue to believe that the approaching October should be a time when many different asset classes should see a turnaround, with equities and Treasuries rising (yields falling) while the US dollar takes a breather from its parabolic rally. The risk-reward ratio should be favorable for bulls to buy dips on dips into the next week,” Newton says in his latest note.

He cites a number of reasons why Apple is unlikely to negatively impact the market in the coming weeks.

First, Apple has held up better than most tech stocks, and even after a couple of bad days, it’s still trading about 9% above its June low of $129.04.

Next, “daily momentum is now reaching oversold levels and DeMark exhaustion appears two to three days away from AAPL stock forming on the daily charts. Note: This should likely lead to a possible trend reversal in AAPL before it breaks the June lows at higher levels,” Newton says.

Source: Fundstrats

Even though Apple is 21% off its all-time high earlier in the year, “its pattern has been far from bearish over the past year, and has been sideways as it trades around the same level as last October.” .

Finally, Newton argues that unless the June lows of $129 are broken, the recent pullback does not have much technical significance and “and should be a buying opportunity going into next week, with optimal levels set on weakness of 135 to $138 should be considered”.

In summary, Apple’s downfall isn’t as bad as many fear, says Newton, and the tech sector has held up a lot better over the past few days than many gave credit for. “Both of these factors should be important reasons why markets could be in a position at a time when many are least expecting to bottom out.”

markets
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Wall Street was poised for a mixed start to the day after stronger than forecast inflation numbers (see below) with S&P 500 futures ES00,
-1.37%
Down 0.1% to 3650. 10-year Treasury yield TMUBMUSD10Y,
3.828%,
which hit 4% this week fell 8.7 basis points to 3.701%, although the dollar index DXY,
-0.07%
rose 0.2% to 112.52.

The Buzz

Nike shares NKE,
-12.81%
are down 11% in premarket trading after the company released results after the close on Thursday and said margins were being hurt by rebates for selling old shares.

There’s a lot of economic data and Fed chatter for traders to consider on Friday. One of the central bank’s most closely-watched inflation gauges, the PCE price index, showed that core prices rose 0.6% in August, higher than the 0.5% expected.

The Chicago September PMI survey was due for release at 9:45 am, followed 15 minutes later by the University of Michigan consumer sentiment index and expected 5-year inflation numbers for August.

Fed Speakers: Richmond Fed Chairman Tom Barkin at 8:30 am; Fed Vice Chair Lael Brainard at 9 a.m.; Fed Governor Michelle Bowman at 11 a.m.; Barkin again at 12:30 p.m.; New York Fed President John Williams at 4:15 p.m.

Euro-zone inflation hit 10% for the first time, September data showed. High fuel costs have prompted the EU to support a package to reduce electricity consumption and impose a windfall tax on energy companies.

The ruling Conservative Party in Britain is paying the price for financial turmoil. Latest polls show the Labor opposition is 33 points ahead of the Tories, the widest since the 1990s. UK Bonds TMBMKGB-10Y,
4.149%
were higher but the pound GBPUSD,
+0.40%
fell back but traded well below its weekly lows.

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The graphic

There’s a lot of bad news. That has encouraged investors to sell stocks and bonds and switch to cash. But that, in turn, could prove positive, notes JP Morgan.

“Global investor implied cash allocation has risen to its highest level since 2012 and above levels seen at the height of the pandemic crisis in March 2020. Cash allocations provide a hedge for both equities and bonds, likely limiting further downside from here. “

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Read: This is the time when “accidents” like Enron and Lehman have happened — this JPMorgan quant favors bonds over stocks

top ticker

Here were the most active stock tickers on MarketWatch as of 6 a.m. Eastern.

ticker

security name

TSLA,
-1.10%

Tesla

GME,
-1.30%

GameStop

AMC,
-1.83%

AMC entertainment

AAPL,
-3.00%

Apple

NEVER,
+1.22%

NEVER

AVCT,
-32.42%

American virtual cloud technologies

BBBy,
-1.62%

bed bath beyond

MONKEY,
-6.55%

AMC Entertainment preferred

TWTR,
+2.57%

Twitter

DWAC,
+3.32%

Digital World Acquisition Corp

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https://www.marketwatch.com/story/heres-why-investors-should-start-betting-on-apple-and-the-stock-market-now-11664535388?rss=1&siteid=rss So investors should start betting on Apple and the stock market now

Brian Lowry

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