Introductory Remarks by PT Below we present a recent article by the Mole discussing a number of technical statistics on the behavior of AAPL over time. Since the company has the largest market cap in the US stock market (~ USD 850 billion – a valuation that exceeds that of entire industries), it is the biggest component of capitalization-weighted big cap indexes and the ETFs based on them. It is also a component of the price-weighted DJIA. It is fair to say that the performance of AAPL is not unimportant for the broad market.
We are not surprised that the long term statistics on AAPL reveal that its performance in September is on average the by far weakest of the entire year. This is in line with the stock market’s overall seasonal patterns (see ‘The Dangerous Season Begins Now’ by Dimitri Speck for the details). It is important to keep in mind that these average data do not mean the stock will always perform badly in September. That is certainly not the case – but the probability that it will perform badly (and the broad market along with it) is fairly high.
Given the current fundamental and technical backdrop this may be particularly important this year. On the fundamental side, we have a sharp decrease in US money supply growth – which is the most important driver of stock prices in a fiat money regime (its effects are subject to a lag, the length of which varies depending on contingent circumstances). Meanwhile, the technical condition of the market looks increasingly dubious. A number of big cap stocks are hitting new highs, but at the same time only 54% of Nasdaq and 61% of NYSE-listed stocks trade above their 200-day moving averages, even after last week’s market rebound. Indexes have begun to diverge noticeably from each other (e.g. the small cap Russell 2000 has weakened against the SPX all year long, after strengthening against it throughout 2016). There was a recent slew of ‘Hindenburg omens’, which indicates fraying trend uniformity as well.
This post was published at Acting-Man on September 5, 2017.