Short-term opportunities in Apple and gold

Window dressing by fund managers leaves both oversold.

By Stock Traders Daily Jul 1, 2013 2:02PM

 ThinkStock, SuperStockMutual fund managers have had a love-hate relationship with Apple (AAPL) over the past year. The same can be said for SPDR Gold Trust ETF (GLD). Both fell out of favor recently, and although many mutual fund managers have had positions in them, as the first half of the year came to a close last week, few actually wanted to report to their shareholders that they were holding either one.

 

Window dressing is the act of manipulating positions so that the quarterly mutual fund report offered to shareholders reflects positions that might be most attractive to them, even though it might not properly reflect the holdings of the mutual fund during that time period. This is a common practice, and because mutual funds did not want to report sizable positions in Apple or gold, there was added selling pressure in both as the quarter came to an end.

 

The question is where will these instruments go from here? The fundamental rationale for the decline in Apple goes back further than any recent news event. While the company has excellent products and selling skills, it must be much more innovative to stay ahead of the competition. In recent weeks there has been additional pressure from window dressing.

 

Gold, meanwhile, was under pressure even before the Federal Reserve hinted at tapering its monetary policy, and that was largely due to the stability in equity markets and the economy in general.  Gold is more in favor when monetary and fiscal policies are not well formulated, and although there may soon be changes to the former, the argument is that policies at least reflect the current environment. Risks are clearly still there, but unless monetary or fiscal policies begin to diverge from economic conditions, gold may not regain its former luster.

 

In both cases, investment risks are extremely high. In the case of Apple, if it doesn't innovate it will stagnate. As for gold, unless serious problems arise it will not likely shine any time soon. In both cases, long-term investments appear to have more risk than short-term trades, so the focus has to be on trading specific opportunities. While the underlying fundamentals for Apple and gold have not changed, the recent window dressing left both oversold as of Thursday.

Tags: AAPLGLD
2Comments
Jul 1, 2013 4:34PM
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Geesh I wonder why Gold is going down? Lets see...our government just dumped thousands of ounces? Or maybe because the fed is pumping billions into the markets giving investors false hope the economy is rebounding? The bottom line here is the government is giving away all our tax money to the world and the banks!! This insanity wont stop until nobody in the world will want our money except for us! And the only reason we will want it is because we will have no choice! Soon everybody will want Gold because it will never be useless like that paper our government prints and calls money!! Gold is accepted world wide as cash but the dollar soon wont be!!!
Jul 1, 2013 3:07PM
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In both cases, investment risks are extremely high. Gold's now selling at the all cost in production costs.  Apple's selling at bout the same point but pays a nice 3% dividend. Apple's productions can be reproduced for much less then Apple charges for them. Gold cannot be reproduced or printed by the Central Banks. I like gold at $1000-1200 an ounce and Apple at $350 PS.
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