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TradeHacking Market Recap for 9/29/15

TradeHacking Market Recap for 9/29/15.

Market recap for 9-29-2015. Markets ended mixed for today with the large caps fairing better than the growth stocks. DJIA and S&P 500 ended up while the Nasdaq Composite and Nasdaq 100 were down.

Investors eye China’s economic slowdown as a possible precursor of what the Fed will do next.

Even the iPhone can’t save Apple

Apple (AAPL) did it! It sold 13 million new iPhones in the first weekend – beating expectations and sales numbers from the launch of the last version of the phone.

But even these numbers aren’t enough to impress investors. And there’s a good reason why.

Wall StreetShares of Apple are down $1.41, or 1.3%, to $113.25 Monday as investors react to the weekend sales statistics of the new iPhone. Bulls were hoping strong sales of Apple’s latest smartphone model would be the catalyst to get the stock working again. Guess not – partially because the numbers aren’t as solid as they sound.

Certainly, the market is down, too. The S&P 500 is off even more, 1.7%, as investors readjust their valuations. But that’s kind of the point. Apple’s product cycle is supposed to be what makes the company – and stock – immune from the vagaries of the rest of the market.

On its face, Apple’s news looks solid. Apple says it sold 13 million units of the new iPhone 6S to its faithful consumers, beating the 10 million launch sales of the iPhone 6 in 2014, says Nomura analyst Jeffrey Kvaal.

But there’s the problem. The number is a bit distorted because this year 12 global regions including China were included in launch, versus 10 last year, says Abhey Lamba of Mizuho. China wasn’t included at launch last year.

Seeing the shares fall following the seemingly better-than-expected smartphone sales is a disappointment for the legions of investors bullish on Apple. Many looking for some good news – anything – to get the stock moving higher again. Shares of Apple are down 15.9% from their high this year – an even worse showing that the market. The Standard & Poor’s 500 is down 11.1% from its high.

iphone_6sThe iPhone weekend sales numbers underscore – too – how Apple’s reliance on an aging product line for a majority of its profit is tricky as the smartphone market matures. While consumers may eventually upgrade their devices, many will delay the upgrade until they need to be replaced. It’s similar to the maturation that has occurred in the personal computer market.

The number exceeded many analysts’ estimates, including a 12 million forecast fromS&P Capital IQ’s Angela Zino. Timing will also help Apple as many of the launch weekend sales will fall into the fourth quarter this year, versus the third quarter of last year, Lamba says. Plus, Apple plans to ship new phones to 130 countries, up from 115 last year.

Analysts remain hugely bullish on Apple stock. The average 18-month price target is $146.76. Lamba, though, is much more cautious saying the stock’s target is $125.

“We continue to like the company and its strong franchise but not that it is primarily a smartphone company, which could make it tough for the stock to work in light of tough compares,” Mizuho says.

Source:  USA Today.com

VW Slams The Brakes On Its CEO

The first of probably many shoes to drop from the big Volkswagen scandal is their CEO Martin Winterkorn even though Winterkorn promised a thorough and transparent investigation regarding emissions cheating.

Volkswagen admitted that to bypass tigheter emissions standards in the United States, that it installed software on some of its makes and models to lower engine performance during testing situations, which helped it pass emissions tests.

The debacle could cost billions of dollars in Volkswagen reputation and expected fines, and doesn’t even scratch the surface of the coverup. Volkswagen refused to answer questions from California’s Air Resources Board, and the Federal Environmental Protection Agency when they were asked to explain how their cars had only a fraction of the emissions in testing versus in real-world driving.

In his resignation letter, Mr. Winterkorn stated that he was “shocked by the events of the past few days” when commenting on the scandal that effects about 25% of VW’s sales in the United States. With upcoming probes and possible criminal investigations, the car maker has gotten itself in a major jam.

Volkswagen stock closed today at $111.50 per share and has lost about 40% of its value since five days ago when the stock was trading around $168 per share.  If you’re a contrarian, this may be a good opportunity to nibble down here.

While the word Volkswagen means “People’s Car” in German, I don’t see many folks rushing the gates to go out and get one in the near term.

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