Monday, September 24, 2012

Monday Morning Musings

Who would have thought we would wake up today to find AAPL down more than $10 and weighing on the market due to lackluster iPhone sales.  I'm not sure how accurate the numbers are.  I don't think they include the orders from the website which haven't been shipped yet.  It's hard to believe there was weak demand when every store I heard about was sold out and didn't know when and how much more they were getting of the hot new phone.  I still think when the first full quarter of sales are reported we will see record unit sales.

Overnight, Asian markets were mixed to lower after continue conflict in the East China Sea.  Also, the People's Bank of China warned that the Chinese economy was still slowing with no end in sight.

In Europe, there is a lot of chatter surrounding the weekend meeting between Merkel and Hollande about how to implement the banking union.  Merkel would like to take a cautious approach while Holland prefers to move more aggressively.  Elsewhere, Der Spiegel  reported that the budget shortfall in Greece is nearly 20 billion euros, which would be double current estimates.

In the US, there is no economic data to speak of this morning.  And the corporate news is mostly being drowned out by chatter about the iPhone. 

The dollar index is higher today, which is weighing on commodities.  Oil prices are weaker near $91.80, while gold prices are also lower to $1767.  Copper and silver are lower also. 

The 10-year yield is lower again to 1.71% after peaking recently at 1.90%.  Yields are still on a path of higher highs and higher lows since bottoming in late July.

Trading comment: The market pulled back this morning but once again quickly bounced from its morning lows.  It is still early but it does appear that dip buyers once again took advantage of the early price drop to put more money to work.  Some of this could be window dressing related to this week's quarter end, while some of it could just be good old performance chasing.  Regardless, the market doesn't seem to want to give up much ground.  If this week plays out similar to many quarter end weeks, we can expect to see one big down day but that's about it.  The big question will be whether any weakness develops after quarter end and once we get into October? But so far we haven't seen many signs of it, expect for the fact that investor sentiment has been growing more and more complacent which is never a good sign.  More on that later.

KAM Advisors has long positions in AAPL


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