Premarket: Apple is red

apple premarket red 1-18-22From Reuters’ “Nasdaq futures slump 2% as rising yields spark tech rout” posted early Tuesday:

Futures tracking the tech-heavy Nasdaq 100 index (.NDX) slumped almost 2% on Tuesday as traders returned from a long holiday weekend to position for a more hawkish Federal Reserve ahead of a policy meeting next week.

Rate-sensitive technology stocks came under pressure in Europe and Asia as two-year Treasury yields , which track short-term rate expectations, crossed 1% for the first time since February 2020.

Frankfurt-listed shares of U.S. megacap tech companies including Google’s Alphabet, Apple, Amazon and Microsoft were last down between 1.9% and 2.5%. They were down by similar amount in early U.S. premarket trading.

Charts: Yahoo!Finance sees a neutral commodity channel index pattern. Max pain has plummeted to $150 from Friday’s $172.50 with a call peak at $170 and a lot of heavy put activity between $130 and $150. The put-to-call ratio is 1.18, the first time it’s been over 1 since I’ve been tracking it. Fasten your seatbelts.

apple premarket red 1-18-22

7 Comments

  1. David Emery said:
    It’s not clear at all to me why Apple, with its huge bank account, would be a “rate sensitive company’.

    1
    January 18, 2022
    • Dave Ryder said:
      @ David E. You’re right. I suppose the risk is interest rate hikes slowing the overall economy and slowing demand.

      0
      January 18, 2022
  2. Jerry Doyle said:
    @David Emery & Dave Ryder: Gentlemen, you ask a question often posed to me by attendees at our periodic evening Apple retail investors’ dinners. My response has been the same as Dave R’s answer, but I am not comfortable with that take. We all know definitively that Apple’s vertically integrated [software and hardware] product development strategy is unique and extremely capable of creating products and experiences that customers believe is compelling enough to spend growing amounts of time and money on to fulfill their activities of daily living and to consume inside their world of work environment. Consumers (especially Apple users) are going to spend on these products, especially on premium products consistent with the Apple brand. So, I too need added clarification other than rate hikes slow the overall economy thus impinging on consumer demand.

    Will one of Apple’s 3.0 members please address this subject for us giving a brief synopsis why Apple with an outstanding balance sheet, an enterprise that generates revenues like some cash cow and a conglomerate that stockpiles green backs as far as the eyes can see is considered a “rate sensitive company?”

    Many thanks in advance.

    0
    January 18, 2022
  3. Robert Paul Leitao said:
    Actually, in the context of “interest rate sensitive” tech stocks, it’s often a reference to enterprises with low earnings and high multiples which tend to be overly represented in the tech sector and on the Nasdaq. Depending on their capital sources, some are highly leveraged and thus heavily exposed to interest rate changes. Obviously this isn’t Apple’s issue but it might be impacted in the short-term as traders and investors migrate to and from different sectors. As interest rates rise, the opportunity costs of investing in equities also rises and these formerly high-flying tech stocks no longer appear to be quite as attractive in a rising rate, slower growth economy. The Nasdaq has been getting slammed pretty much since the beginning of the year.

    1
    January 18, 2022
  4. Jerry Doyle said:
    Thanks brothers Joseph & Robert Paul. This subject will be discussed at our next Apple retail investors’ dinner with printed copies of your responses given to each attendee. Most attendees never had a brokerage account and/or knew little to nothing about investing until we started the Apple retail investors’ dinners.

    I welcome anyone else’s response.

    1
    January 18, 2022

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