This Bad Apple Might Have Killed the Bull Market

This week, we kicked off our YouTube livestreams and shorts by examining Apple Inc.‘s (AAPL) Monday announcement that it is reportedly downsizing – or at least reducing hiring in advance of economic troubles. We also looked at the dollar’s strength and its impact on the markets.

Plus, we answered several reader questions about specific stocks, bonds, and the market in general. If you have a question you’d like answered in one of our livestreams, email us here.

Rotten Fruit

Yesterday, Bloomberg reported that Apple would reduce hiring and spending for some of its teams to compensate for the economic downturn.

The company hasn’t officially announced any major hiring decisions, and the announcement won’t affect product launches (a major one of which Apple plans to roll out in 2023 with the launch of a mixed-reality headset, the company’s first major new category launch since 2015). Shares were down 2.1% at market open this morning, and AAPL has slipped 17% this year, on par with other tech stocks and the rest of the market.

A Strengthening Dollar

The S&P 500 is still in a bit of a holding pattern, stuck around support that we expect will stay around 3,650-3,950 for the time being. This could provide much-needed stability and a firmer foundation, if not a lot of upside.

Look for net importers like Walmart Inc. (WMT), Dollar General Corp. (DG), and Target Corp. (TGT) to get a boost as we see the dollar gain strength. As it is in parity with the euro, companies doing business overseas will see emerging markets suffer.

In other words, if investors hold a lot of stock in those net importers, then they’ll see their portfolios gain value. Conversely, investing in overseas companies in emerging markets, like China and India, may suffer because the U.S. dollar will not go as far.

Look for some market gyrations starting Tuesday, as the unofficial “tech stocks earning season” begins. Things still don’t look great for Netflix Inc. (NFLX), which will report earnings late Tuesday after the markets close. We’ll have to see how Netflix’s report – and other tech stock announcements – affects the overall market Wednesday morning.

Reader Questions

And now for a few reader questions we answered during the livestream…

  1. Now that the large banks have reported, along with Schwab, what do they say about the economy and the stock market? – Greg
  2. Can you look at Lockheed Martin (LMT)? Headlines Monday said they were close to a deal with the Department of Defense. – Geraldine
  3. How long do you think the iShares 20+ Year Treasury Bond ETF TLT (TLT) is good to short? – Bruce
  4. Thoughts on the GARP (growth at a reasonable price) for Advanced Micro Devices Inc. (AMD), AAPL, Nvidia Corp. (NVDA) and Microsoft Corp. (MSFT)? Is this the bottom for tech stocks like them? – Terence

Go here now to view the full video post and get the answers to these questions.

If you have any questions yourself about options trading, specific stocks or bonds, or market trends in general, we’re happy to answer them. Just email feedback@investorplace.com.

Sincerely,

John and Wade


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