Large cap tech weak, but not Apple
Intel drags down the sector even as the S&P and Dow hit new highs.
By Thomas H. Kee Jr.
Large cap tech looks weak Thursday, with one exception. Apple (AAPL) is remarkably strong ahead of its earnings report. A disappointing report Wednesday night has Intel (INTC) down, and that seems to be the cause of the weakness in the sector, but Apple is not moving with the pack.
Early this morning, while the S&P and Dow were hitting all-time highs, ProShares UltraShort QQQ (QID), the short ETF for large cap tech, was actually up solidly.
The automated trading strategies offered by Stock Traders Daily bought ProShares UltraShort QQQ at what currently are session lows. Timing means everything to trading strategies. However, insight also helps. Recently, Apple had some negative news pertaining to competition and product rollouts, but Wall Street has been buying the stock, and it is up about 10% from recent lows. The strength ahead of earnings could be due to expectations of solid sales given contractual requirements to buy Apple products from carriers such as Verizon (VZ), or it could be part of the Great Rotation as former bond investors find value in AAPL. Whatever the reason, we can safely assume buyers are not expecting disappointing numbers.
Normally, if investors expect a bad release they will sell rather than buy ahead of earnings, and if they are surprised the stock will rally. In this case they are buying ahead of earnings, but we know there are material overhangs and the stage is set for them to be a little disappointed.
According to Stock Traders Daily, if NASDAQ resistance holds, it is best to play the trade with a large cap tech ETF like QID. Be very cautious about Apple's release.
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A light news day combined with heavy technicals weighed on the market.
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