Another Down Day

by Larry Levin

The stock indices had another down day that sent the indices to 7-month lows and notched its worst 2-day decline since last year. Not even the heretofore guaranteed market goosing Apple could pull a rabbit out of the hat. AAPL was slammed 2% as the introduction of a new iPhone failed to boost the stock. Apple is a little concerned with all of the attention-grabbing "android" phones, thus today's announcement. Was the AAPL sell-off a glimpse into its future?

Regarding Apple, Bloomberg said the following - Apple lost 2 percent to $250.94 after Chief Executive Officer Steve Jobsintroduced the iPhone 4 today at the Worldwide Developers Conference in San Francisco. The iPhone is now one of Apple’s most important products, raking in more sales than the Macintosh computer last quarter. Apple has sold more than 50 million iPhones in the past three years, accounting for 40 percent of revenue.

“There’s usually expectations with Steve Jobs getting up on stage -- and we have a weak environment with light volume and not a lot of investor enthusiasm -- so Apple turned lower after the unveiling of the new iPhone,” said Michael O’Rourke, chief market strategist at BTIG LLC in Yardley, Pennsylvania, which serves institutional investors. “Apple being the second-largest tech company in the S&P means any volatility can have a noticeable influence on the broader indexes.”

The article went on to say - U.S. stocks fell last week as lower-than-estimated jobs growth and a worsening government debt crisis in Europe fueled concern the global economic recovery will slow. Janet Yellen, President Barack Obama’s pick to be the Federal Reserve’s next vice chairman, said in a San Francisco speech today that while there appear to be improvements in the global economy, “significant headwinds to stability remain.”

Benchmark U.S. indexes advanced in early trading after German factory orders unexpectedly jumped for a second month in April as the weaker euro boosted export demand and companies increased investment. Hungary’s government pledged to control the budget deficit and make structural changes to overhaul the economy as it further distanced itself from suggestions the country was facing a Greece-like crisis.

“This is a small glimmer of hope that Europe might be doing better,” Malcolm Polley, who oversees $1 billion as chief investment officer at Stewart Capital Advisors in Indiana, Pennsylvania, said of Germany factory orders. “A lot of the issues affecting markets have been coming from Europe, so this is an encouragement.”

Is this a glimmer of hope from Europe? I think it is far too early to tell; however, the market may balance for a while until it gets some new news. Although today's close was quite bearish, something odd happened: the sell-off occurred on low volume. This usually only happens on up days but the numbers don't lie. Because of this I would expect some firming in the S&P near 1040.00.



Previous Day's Trading Room Results:

Trade Date: 6/7/10

E-Mini S&P Trades*
(before fees and commissions):


1) VA buy @ 9:32am at 1066.25 = +.75 & -.25 (2 lots)

2) Algorithm positions (18)

3) “Reading the Tape” positions (0) …combined Secret’s, Algo, & “Reading the Tape” total… -0.25


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