About the Author

author photo

Zach Bass (a.k.a Ernie Varitimos) is Chief Bloviator of Investor in the Wilderness. He has 30 years experience as a Tech Maven, Investor and Consultant. Zach has been using Macs since their introduction in 1984, and investing in the markets just as long. His mission is to help guide all level of investors through the Apple Ecosphere and make sense of the markets. Zach's take on Apple, the markets, and life pursuits, will keep your mind tuned.

See All Posts by This Author

Apple Investors Fasten Your Seatbelts, Put on Your Crash Helmets

September 10th, 2008 • Related • Filed Under

What are the ingredients for a very sick market? Let’s start with the lesions on the surface, like a commodities bubble burst, total financials breakdown, anemic tech sector, and a housing fiasco. Now let’s combine that with the following deleterious symptoms like big volume on down days, gap ups finished off by black candles, and negative divergences in all the time frames. Then let’s delve a little deeper into the internals of the markets, such as a relatively sublime put-call ratio, a VIX with plenty of room to grow, new lows picking up, and declining issues eclipsing advancers.

Normally I would say that you have to look at market indicators with a contrarian eye. When things seem their worst, then a reversal can’t be far down the road. When sentiment is in the toilet it’s time to whip out the glade. But the problem here is that while momentum is pointing down, there’s no capitulation in site. The VIX as I mentioned has not even come close to peaking, in fact it declined a good portion of the day today. And while the bull-bear spread is at 4 percent, the put-call ratio hasn’t even broken a sweat, sitting well below 1.0. What does this all mean? It means there’s no fear in the eyes of the Bear.

So why would I think Apple is so vulnerable? It’s a strong company, with incredible products, healthy sales, zero debt, etc. There’s no denying all these facts. But to the big money trader, none of that matters right now. What matters is that tech is weak, and AAPL is the de facto leader of tech and it can’t hold a bid. If AAPL goes down, what chance does the rest of tech have? Well, traders know they can bring AAPL down to do their bidding, and so they will. The other leaders of tech, like GOOG, BIDU, AMZN and RIMM even more vulnerable. Bring down AAPL, then any of these other leaders will follow, then the rest will go down like dominoes.

All the bears need to do is bring the S&P south of 1200, and then everything will unravel. Well AAPL is in the S&P 500, and tech is very prominent there as well. The other dynamic is that the S&P is energy heavy. Energy and energy services are weak as well. Oil is on the precipice of breaking into double digit territory. Yet another piece of the puzzle is financials. This past weekend we had a government seizure of the two biggest financial houses in the world, and the markets shook it off unimpressed. Now we have LEH about to bite the dust, maybe Wachovia right behind them.

Come on folks, let’s face reality. The market is going down, and there’s nothing we can do about it. Well, we could just face it. Then we have a choice, either step aside or ride this thing with reckless abandon. When will it happen? I don’t know, other than to say probably sooner than later.

More on this topic (What's this?)
The End of Steve Jobs ™ (The Curious Investor, 12/18/08)
What’s going on at Apple? (Part I) (The Curious Investor, 12/17/08)
7 Great Lessons to Learn From Apple in the Last Year (Stock Trading To Go, 9/29/08)
Apple Stock Struggles With $180 Resistance (Stock Trading To Go, 8/21/08)
Read more on Apple at Wikinvest

Viewing 21 Comments