Sometimes it’s a late Christmas present that can put a smile on your face. Running the risk of drawing the ire of steadfast believers and holders, I believe AAPL breaking below its summer Lows is a great indication that we’re finally getting somewhere in this bear.
This together with liquidity drying up over the festive period was likely a main driver of the put/call ratio in equities (below chart) spiking massively. One has to understand how profound this weakness is for the current market, as Apple is both the largest component of the popular market averages and likely the last tech stock considered a “safe” bet by institutional money.
However, other sentiment indicators are not yet flashing capitulation. We’ll see how this turns out, but it’s a start.
Buying TSLA stock was until recently every retail investors’ go-to activity for excess cash … Now, Tesla is 73% off its Highs, enough to wring more hope out of the last bulls left from the 2020 craze. It’s a great company, but it’s stock is dead for the foreseeable future.
As stated before, if AAPL can follow retail-hype rival Tesla and other last-bull Tech stocks and break meaningfully lower in 2023, more and more permabulls will capitulate over the next few months. An extreme in some shape or form is by now a requisite for this market to bottom in the long term – whether that will manifest as a negative or a positive surprise is.
AAPL is not only a melting pot for amateurs, but also for institutional die-hard holders. Falling below its 2021 Lows (~$116) and a correction of anything more than 35% should suffice to stimulate some dumping or scaling out from fund managers.
Again, I might be wrong on this, in magnitude or duration, it does not matter. All that matters is leading stocks and indices, and so far there is nothing.
Let’s see what the New Year will bring. I hope it’s more downside, to shake out more of the residual weak holders and bring more buying power to the sidelines for an explosive 2023 where skilled stock pickers may outperform.
In any case, I hope the next year will bring you prosperity and success in the markets and life…
See you soon!
