Morning Market Report: Apple Failed to Impress, The Ugly Banks

This article was last updated on May 20, 2022

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1300 on the S&P 500 proved no match to further bearish market sentiment Monday. As mentioned yesterday, Apple’s stock did not muster the sort of enthusiasm that would have helped overall Wall Street. As a by product of the WWDC, Apple shares sank over $6 when nothing awe inspiring was released by CEO Steve Jobs.  Sure, the cloud, and specifically the iCloud will eventually overwhelm, but the investment crowd seemed to be displeased with this initial version of the iCloud not including steaming music. The whisper rumor as it turned out centered on speculation the wraps would taken off of the iPhone 5, but to no avail. So for now, Apple call holders are trapped and underwater. #option #fail. This is a reminder, that the options crowd can get it very wrong and can actually be a good contrary indicator. It’s one of the rules to live by in trading. If the trade seems too easy and everyone’s doing it, it’s more than likely not going to work – otherwise we would have all minted our money years ago and be retired multi millionaires. For me, options have largely been an effort centered around searching for the unusual block institutional activity – an easier said than done pursuit that takes lots of time and study.
One of the more curious reactions to Apple, was Research in Motion. The dead stock $RIMM mustered a relief gain of 12-cents. The relief being that its Blackberry was not blown away by a new iPhone 5. Incidentally, I see Apple shares as a long term hold. There will be shock and awe with its next earnings report and eventually enhancements will come for iCloud and the new iPhone5 will be released.
For the record, the S&P 500 lost 1% Monday and is now perched at 1286. While turnaround Tuesday action is signaled this morning with positive futures (head fakery), the S&P drop to below 1300 has given the market even more of a bearish glint. 1250 (about the 200 day moving average and the March lows) still looks like a good round intitial downward target to be accompanied by the requisite ups and downs (churn) along the way. I am not ruling out an eventual decline to the 1200 level, The recent series of red candles is very much against the market’s grain this year, though a near term bounce wouldn’t be too surprising, but the up trend through May has certainly be broken and cannot be ignored. Look for resistance in the 1295 area.
The skids could be further greased later today when Chairman Bernanke does some gut spilling. The Fed head speaks before of the market close, at 3:45 p.m. ET, at the International Monetary Conference in Atlanta. Should Bernanke indicate any sort of continued accommodation to the market – short bets are off and the market will turn on a dime. Many pundits, however, are expecting that he will acknowledge the economic headwinds, but not outline a course of action. This might potentially get the market whipped up into a further tizzy. This is going to be a primary tell in the future: the day that Fed officials begin to sound more dovish and chummy about future accommodation. Imho, I don’t think that day has arrived.  
There are plenty of well known problems for the market to contend with – not the least of them being weak banking stocks. I have long maintained that no meaningful broader market participation can come with out the strong participation of the financials. The XLF has underperformed.
Bank of America is one of the sorry cases that has kept the XLF from mounting any sort of steam. Most people see nicely signed BofA branches dotting the fruited plain. Me? I see only INSOLVENCY. Yes, there must be something wrong with me. It’s like seeing dead people. lol.  From Bloomberg>>>> BofA Stock Hits 2-Year Low on Mortgage Concerns

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