Daily Market Update – April 24, 2014 (Close)
There’s only one topic for today, and that’s Apple.
If you haven’t seen it, my take is that Tim Cook has capitulated and signaled that Apple’s days of growth are over.
It’s no coincidence that Carl Icahn seemed to quietly fade away. You can be pretty certain that he knew what was coming and it was part of his agreement to get to the sidelines.
I wouldn’t, however, count him out, as Apple continues to have large cash reserves and Icahn isn’t exactly a shrinking violet.
What that means for me is that Apple may once again become a regular covered option trade, as it was for much of the previous decade. During the time that it could only go higher it wasn’t a good candidate, but it has also been one for much of the past year and now will trade with a more affordable buying price, even though that is all optics.
Hopefully, some of the good news from Apple will filter through to the rest of the market as the week is in its final stretches. The pre-open futures showed strength although it quickly disappeared in the first 20 minutes.
As the day wore on I think traders just stopped everything they were doing so that they could discuss the pros and cons of Apple’s decisions.
They certainly didn’t do much in the way of trading.
That would be nice and certainly welcome, especially if it leads to some assignments, which have been in short supply lately.
While I don’t really mind not so regularly replenishing cash, at least as long as the bottom lines grows, I do mind.
For starters, I like having a cushion. Not just in the event of a sudden plunge and the ability to pick up some bargains, but because having the cash reserve offers you many more paths to travel if an opportunity does arise.
It’s all about having the flexibility to act when action seems appropriate.
When you feel as if you are getting down to an uncomfortable level you change the way you approach things.
Today will be an interesting day, as Apple hasn’t been a market leader for nearly two years and has been trading with a beta of 1.01. That’s as close as you can get to mirroring the S&P 500, or so it would seem.
Essentially, Apple has been the S&P 500, although that has been misleading, because for the past 6 months it has often gone in the opposite daily direction, but the pure math of the metric shows it to be in near perfect concordance.
But it’s good to have it back on my radar, especially as an ex-dividend date nears.
As with most things, you never know what the future will hold, but just as Apple has found its cash reserve to be a mixed blessing, as it has brought in the vultures, I can understand Steve Jobs’ desire to have cash available, going back to the days when he was held hostage by not having the cash when needed.
As opposed to Jobs, I want to have it both ways. I want to spend mine and grow mine in an ongoing cycle.
For the rest of this week I don’t think I’ll be spending very much, but I wouldn’t mind acting like a drunken sailor next week, if only Apple can lead the way and show others the light.
Today, even Apple wasn’t enough to nudge the market away from the flat line, as it traded in as narrow of a range as we’ve seen lately.
Still, not too bad of a day and at least we’re still in the game as the week is coming to its end, once again proving that these meandering weeks can be the best of all worlds.