Premarket: Apple is green. Set to open at record high.

From the Wall Street Journal’s “Stock Futures, Oil Rise, Pointing to More Seesaw Moves on Omicron Uncertainty” posted early Wednesday:

U.S. stock futures and oil prices rose, suggesting markets would claw back some losses sparked by worries over the Omicron variant and the unwinding of Federal Reserve stimulus.

Investors have little to go on as they assess whether the variant will lead to renewed restrictions in the U.S. and elsewhere and, if so, how governments and central banks would respond to support the economy. Though drugmakers have said the variant first identified in southern Africa looks like it could make existing vaccines less effective, they expect to be able to update the shots. Investors say a return to full-scale lockdowns is unlikely.

The uncertainty has led to seesaw moves in global markets that extended into Wednesday. Futures for the S&P 500 rose 1.2%, signaling gains for the benchmark index. The S&P 500 fell 1.9% Tuesday, closing out a decline for November after a late-month dive sparked by the emergence of Omicron.

“We just don’t know how much more infectious it is, how severe the symptoms are and what the impact of that is,” said Sebastian Mackay, a multiasset fund manager at Invesco. “What I’d assume now is this probably isn’t enough to derail the recovery that’s going on.”

Charts: Yahoo!Finance sees a bearish relative strength index (RSI). [Carter Worth, by contrast, called Apple’s RSI “off the charts.”] Max pain at 6:00 a.m. was at $160 with call peaks at $160 and $165.

40 Comments

  1. Romeo A Esparrago Jr said:
    Woah.
    Wow.
    What the …
    Whee!

    7
    December 1, 2021
  2. Gregg Thurman said:
    My short DEC 10 $167.50 Calls are soooo underwater.
    My long DEC 23 $165 Calls are soooo far up.

    My Calendar Spread is very profitable, although not as much as it would have been, had I not sold the $167.50$.

    3
    December 1, 2021
  3. Tommo_UK said:
    RSI and other indicators are indeed off the charts, which makes this tear up the mountain needing a lot of momentum to maintain. However the pullback to $155 gave a pause to refresh and now the indicators are looking strong (and stretched) again.

    This price action can yo-yo like crazy once it sets in, within a strong medium-term uptrend, so daily movements need to be taken with a pinch of salt. I’m still doing nothing, although everyone seems to be trading their butts off with AAPL at the moment. Even my neighbour next door, who has never traded or invested in AAPL is suddenly asking me for stock tips.

    Having just had a skiing trip to Switzerland for Christmas cancelled because they are red-listing countries with Omicron cases, I don’t think I’ve ever felt this risk averse (note: that isn’t the same as bearish – it’s a subjective risk/reward evaluation) since February 2020 – which is probably the ultimate contrarian BUYMOOOAR indicator 🙂

    3
    December 1, 2021
  4. Robert Paul Leitao said:
    I’m just enjoying the ride. The scenery is beautiful.

    6
    December 1, 2021
  5. Michael Goldfeder said:
    I read a few articles talking about the FCF of Apple being in excess of $93 billion, and that’s starting to attract the attention of many investors along with the WS crowd during this new Omicron variant.

    Rather ironic that it takes a supplementary pandemic variant to raise the awareness of Apple’s monstrous FCF and terrific balance sheet.

    5
    December 1, 2021
    • John Konopka said:
      Katy Huberty has been talking about FCF for quite a while now.

      1
      December 1, 2021
    • Passengers never really pay much attention to the condition of the lifeboats until the ship starts to sink.

      0
      December 1, 2021
    • Jerry Doyle said:
      @Michael Goldfeder: “…. Rather ironic that it takes a supplementary pandemic variant to raise the awareness of Apple’s monstrous FCF and terrific balance sheet.”

      Well stated brother Michael G. It is a stated fact that many on this forum often reference. In fact, it is the reason that similar to Joe Bland in his investment with market equities, that I am “all-in” with Apple. It is that fact that gives me comfort with being all-invested in a single stock. Add the fact that Apple continues to be both a “growth” stock as well as a “value” play, then one has the best of both worlds. I always believed that being on the Apple ship in stormy seas that Apple better than all other equities is the one company that could navigate those trouble times better than any other company. It amazes me that so many new investors pouring into the stock now only are beginning to “get it,” as you so clearly stated.

      1
      December 1, 2021
  6. Alan Blair said:
    Just sold 200 shares at $169.84. Sweet!

    5
    December 1, 2021
    • Gregg Thurman said:
      Upvoted you Alan. Hope you have many more, because, if WS’s view of AAPL has changed, I believe $200 is right around the corner with $250 a block further down the road.

      1
      December 1, 2021
      • Bob Goldstein said:
        We live well but modestly. My wife for years has wanted me to sell shares so we could have second house, etc but I have always refused to sell a single share. So far I have convinced her the shares are the Golden Goose and the best thing is to just live within our cash flow

        6
        December 1, 2021
      • Alan Blair said:
        Thanks Gregg. The last time I sold shares was July 31st, 2020 – aapl had a good pop that day and ended up around $420 ($105 split adjusted). Hard to believe we are where we are today.

        2
        December 1, 2021
    • Troy Thoman said:
      you could have sold calls against your shares as well.

      0
      December 1, 2021
  7. Brent Maynard said:
    In October of 2000, my wife was switching jobs and we rolled her 401k into
    and IRA at fidelity. She didn’t like managing her funds, so I have always done it for her. I matched up her investments pretty evenly since her 401k was managed by fidelity as well. After doing as close to a 1-1 transfer of mutual funds, there was a little cash left over. I cannot remember why, but I chose to buy a 100 shares of APPL for $2,600. This week has been a milestone for that original investment, as including reinvested dividends in AAPL, the original investment has topped $1M. In hind sight, I wish I would have bought 200 shares or 1000 shares, but this was pre- iPod days and some uncertainty of Apple’s future. The good new is over the years we have both continued to invest in APPL, and we will be looking forward to nice retirement this coming year. Here’s to continued success for APPL and investments.

    8
    December 1, 2021
    • Romeo A Esparrago Jr said:
      I love stories like yours.
      Here’s to tasting your champagne wishes & caviar dreams.
      🙂

      3
      December 1, 2021
    • Gregg Thurman said:
      Let us know when you start farting through silk underwear.

      2
      December 1, 2021
    • Robert Paul Leitao said:
      Brent: Congratulations! We love reading about good things happening for good people! Best wishes for a wonderful retirement! Please keep us posted and please continue to participate in the conversations at Apple 3.0!

      3
      December 1, 2021
  8. Robert Paul Leitao said:
    TSM and ASML (thank you, Roger!) are spiking higher with both equities up over 4% intraday. I’m looking for any corresponding news.

    2
    December 1, 2021
  9. Roger Schutte said:
    Robert, no real news on TSM + ASML other than Amazon’s AWS announcing Graviton 3 chips yesterday which are made using TSM’s 5n process. I think the market might have decided to own companies that do real manufacturing and with long backlogs and pricing power instead of owning the Peloton + Robinhoods of the world. But, who knows which way the wind will blow tomorrow?

    0
    December 1, 2021
    • Robert Paul Leitao said:
      Roger: Thank you. It looks like chip makers are the winners on the day. Increasing chip capacity is a financial risk, but the rewards are likely to more than outweigh the risks. Huge capex commitments among the chip makers for new capacity in the US. That’s good news for the economy with an eventual reduction in geo-political risks for the chip makers. It’s a “booster shot” to support stable, long-term growth opportunities.

      0
      December 1, 2021
      • Bart Yee said:
        Considering Samsung, Intel plus TSMC are now in a Fab-race to build additional capacity cutting and bleeding edge 5nm and lower fab process and production facilities, the chip machinery / fabrication suppliers will greatly benefit.

        Part of the chip shortage solutions & questions though are whether anyone will invest in expanding older (and cheaper) >= 14nm processes where a majority of in shortage control chips for auto and electronics are made? Or will end users just work through the shortage until demand eases? Or will these chips transition to smaller processes with any available excess fab capacity (unlikely since it probably would cause a price increase)? It would be interesting to follow Ford and GlobalFoundries to see which processes and machine suppliers they will use to produce Ford’s desired chips, possibly under license, for bespoke production and use. Would it be cheaper and older processes or reasonably newer?

        IMO, it’s quite possible there could be a glut of fab capacity within 2-3 years if demand normalizes.

        1
        December 1, 2021
        • Robert Paul Leitao said:
          Bart: Good questions and good observations! I don’t think the economics work in favor of building greater capacity for lower-cost (legacy) chips. I think those supply issues will need to be worked out in time. As you point out, the lead times on construction and development don’t work out. As those fabs come on line they are more likely to contribute to a glut versus resolving supply issues. The capex dollars, in my view, will be deployed on higher-priced chips supporting the latest digital products. It’s in Apple’s interest to continue to deploy the company’s capex in partnership with its leading chip suppliers for the chips the company needs.

          1
          December 1, 2021
  10. Greg Lippert said:
    And just like that AAPL has pulled way back. Why? Because the obvious happened and the new Covid mutation was found in the U.S. Duh! By the time they find a variant its already too late.

    1
    December 1, 2021
  11. Robert Paul Leitao said:
    Wow! CRM is getting hammered! The market didn’t like conservative guidance following strong results. That’s becoming an all-too-familiar story!

    0
    December 1, 2021
    • Michael Goldfeder said:
      @Robert:

      I’ve been watching Salesforce (CRM) for a while as Benihoff is a very impressive CEO. I’m not going to sell any of my Apple, however, if I did, I’d be picking up shares as this decline is way oversold IMO. It’s not as if they started to all of a sudden lose money. Guidance is what it is. Which is why Apple is smart to refrain from doing so until this pandemic and the various variants are somewhat under control.

      First it was the Covid pandemic, then the supply chain disruptions, followed by the chip shortage. Now the Omicron variant has taken center stage and roiled the markets.

      0
      December 1, 2021
      • Robert Paul Leitao said:
        @Michael: That’s all true. PFE was higher again today and was among the market’s large cap standouts for gains. In my view, that’s a COVID play and evidences the market’s jitters about the new variant.

        0
        December 1, 2021
      • Gregg Thurman said:
        First it was the Covid pandemic, then the supply chain disruptions, followed by the chip shortage. Now the Omicron variant has taken center stage and roiled the markets.

        As I’ve posted before, there will always be risks, some will materialize and some won’t. Importantly, very, very few last more than a day or three.

        0
        December 1, 2021
    • Troy Thoman said:
      I bought some CRM today.

      0
      December 1, 2021
      • Robert Paul Leitao said:
        Troy: One rating firm just increased its price target to $417 per share on CRM and another just moved it to buy from hold based on yesterday’s results. There was some forex impact on the quarter and guidance is conservative. Today’s sell-off may have created an exceptional buy opportunity. The market’s “edgy” and may be overreacting to even a hint of disappointment. I think you snagged a bargain.

        0
        December 2, 2021
  12. Bart Yee said:
    No matter where AAPL ends up today, we know by the intraday high of $170.30 and volume already at 126M shares with 25 min left in session that’s there’s an ever rising threshold with positive sentiment built into AAPL.

    Those selling are still getting record high prices for their AAPL shares while buyers are getting a 2.6% discount from the intraday high. I agree with Brother Joseph that those who need some year end cash are doing a bit of trimming here and there and sell less # and get more in return. Corporate and individual tax planning efforts for 2021 will culminate by end of year. I suspect some other tech winners will be trimmed and redistributed to AAPL.

    For those with IRA or beneficiary IRA’s and have RMD requirements to satisfy, this will play a role in some selling. By the same token, new RMD’s for 2022 will be calculated in year end account values and your age based actuarial factor. So we could also see some selling as AAPL rises into January, February and March in anticipation of 2021 taxes.

    1
    December 1, 2021
    • Robert Paul Leitao said:
      Bart: There’s also the factor of year-end tax selling to lock in gains ahead of any increase in rates. If Apple sustains today’s trading range, there may be some positive uptake by mutual funds as they do their quarter-end and year-end “window dressing” of portfolios.

      1
      December 1, 2021
      • Gregg Thurman said:
        I completely disagree with the emotion that tapering or increasing interest rates will negatively impact Apple/AAPL. It’s FCF eliminates the need to borrow, and when Apple does, lenders bend over backwards offering incredibly good rates.

        Apple is its own bank, and now with its own credit card it is financing its sales internally, offering Apple Card holders great incentives to use Apple’s finance product over a 3rd party provider. Any increase in cost of monies is easily made up by the collection of credit card fees and interest.

        0
        December 1, 2021
  13. Bart Yee said:
    Well, AAPL finished the day -$0.53 with 145M shares trading. After hours has a slight negative bias.

    We’ll see how omicron variant info trends as more becomes known. At least countries are responding quickly and testing copiously. IMO we’ll know within 2-4 weeks a lot more about omicron’s characteristics and behaviors in people. If the news is positive, that would set up a nice relief rally.

    0
    December 1, 2021
    • Robert Paul Leitao said:
      Bart: Thank you. As a nation (and a world) we are more aware and have regimens already in place to protect life and health from the impact of a new variant. The market (like most of us) doesn’t like uncertainty. I’m hopeful some concerns may be put to rest over the next few weeks. I won’t say concerns are “overblown” because the moment we choose not to be vigilant is the moment we are in much greater danger. Vigilance is essential.

      2
      December 1, 2021

Leave a Reply