Did Apple Just Save Tech?

Tech stocks have been battered lately but as in the past Apple just might of saved tech stocks, at least for the time being. After the close, Apple reported an astonishing $53 billion in revenues growing at a 17% clip. What’s more is Apple’s profits rose more than 30% coming in at a whopping $11.5 billion in profits. I thought there is a thing called the law of large numbers? Apparently not at Apple! People don’t realize how hard it is to grow a company of this size in the way Apple continues to grow. Year after year, quarter after quarter, simply amazing. The question now becomes is yesterday’s earnings beat by Apple enough to put a floor in tech stocks. Technology stocks have been taken out to the woodshed as of late with seemingly no end in sight, until yesterday. What I will be looking for today and for the rest of the week is whether or not companies continue get sold off after their earnings release which has been the trend this particular earnings reporting season.

In my last blog I eluded to the possibility of a breakout of the S&P 500 (chart) or a triple top fade in the index.¬† Quite honestly neither really happened, at least not yet. The S&P 500 (see chart below) essentially has been trading in a range between 2800 and 2850. Earnings reporting season has yet to be the catalyst for such a breakout or breakdown for that matter. Triple tops are very powerful to the technical set-up on any given index or stock for that matter. Apple’s earnings could very well be the catalyst for the markets to once again challenge the current triple top formation. Now that we are in August I do think we will get that answer soon enough. I do expect volatility to pick up a bit here in August which is not uncommon for this time of year. The SPY’s (chart) which tracks the S&P 500 (chart) has demonstrated support at its 20-day moving average which is essentially $279.50 and the overhead resistance is essentially the $285.00 zone. Let’s see if the S&P can break away from either line. Good luck to all ūüôā

~George

S&P 500 - George Mahfouz Jr.

Is That It?

After what appeared to be the beginning of a healthy correction in the early part of August, stocks held true to form and rallied back this week even as Ukrainian forces engaged and attacked a Russian armored convoy today. When news leaked about the attack, the markets did reverse their earlier gains and dropped meaningfully only to find support and rebound off sessions lows. The Nasdaq (chart) actually finished the day in the green. If you are long this market and are bullish for the remainder of the year, you have got to feel pretty good about how the markets have responded this week to a very unstable geopolitical global environment. For the week, the Dow Jones Industrial Average (chart) gained 0.66%, the Nasdaq (chart) finished the week up 2.15%, the S&P 500 (chart) +1.215% and the small-cap Russell 2000 (chart) closed the week up 0.91%.

Does this mean we are out of the woods yet? I am not so sure. One thing that I believe will continue is market volatility. There is headline risk and equities¬†are certainly reacting to sudden¬†headlines that come out of Ukraine as well as¬†the middle east. The surprise I think is how resilient the U.S. stock market remains in the midst of the geopolitical risks that are upon us. However, this is the one thing that continues to concern me is the escalation of conflict in not just one region but now in two. One way to insure a portfolio is to buy some protection in the form of S&P 500 puts, and more specifically puts on one the most popular ETF that tracks the S&P 500, the SPDR S&P 500 (NYSE: SPY) (chart). So if you have a long portfolio in equities, by buying put protection with the SPY’s, it is like buying an insurance policy should the equity market experience¬†a correction. Put options go up in value should the equity or index you buy puts in goes down in value. Options are not for everyone and it is usually wise to¬†consult with a certified financial planner(s) before implementing any investment strategy, I am just illustrating one¬†way to protect a¬†long portfolio by way of insuring it to a certain degree.

As far as I am concerned, I will continue to monitor the technical conditions of the aforementioned indexes and look for any signs of overbought or oversold conditions to act upon. As¬†of right now the key indices are not¬†in either condition. Good luck to all ūüôā

Have a great weekend.

~George