Monday, October 19, 2009

One Apple a Day....

Wall Street darling Apple reported earnings after the close today and generated some very enthusiastic headlines, with one for instance clamoring 'Apple's Insanely Great Quarter: 3.05 Million Macs, 7.4 Million iPhones Sold'. At, the headline was nothing short of sensational, stating that 'Apple Kills Recession.' In fact, the company reported that its fourth-quarter earnings were up 47% from those delivered in the fourth quarter one year ago.

Not surprisingly, Apple's stock was boosted considerably in after-hours trading, rising more than 6%.

Earlier in the session, some weakness in financials had dragged the market down, but the major indexes quickly rebounded and surged considerably, as investors apparently continue 'to buy the dip'. Once again, equities and commodities benefited from the relentlessly sliding US dollar, with the greenback dipping a further 0.3%. The US dollar is now just a touch above 12-month lows against a basket of major foreign currencies. According to one survey, between 95% and 99% of investors are now bearish on the US dollar, a remarkable statistic that likely qualifies this as a 'crowded trade'.

Market observers note once again that trading volume appears to be lacking. In today's session, less than one billion shares were traded on the NYSE (compared to recent average volume of roughly 1.2 billion shares per day). Market skeptics point out that the pace of recent market gains is not sustainable and that the market could soon run into serious overhead resistance. Bulls on the other hands continue to point to improving economic data and particularly to surprisingly strong earnings.

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