January 22, 2013
Weekly Market Outlook
By Keith Schneider
The stock market continued its rise this week and looks poised for more. The Algerian hostage crisis has highlighted the fact that the Arab Spring might have turned into a Terrorist Summer. With the security of existing oil facilities in Africa under scrutiny, any new expansion must take this under consideration as well. How much of a premium all of this adds to the cost of energy remains unclear.
The Wall Street Journal ran a story that independent research firms report orders for AAPL iPhone screens from its various Asian suppliers had dropped over 50%. This caused a steep dive in APPL stock and cleared out stop orders under $500, which was a critical price level that had held since mid-November. Curiously, the WSJ deleted certain inaccurate information in this article shortly after it was published; but the damage was done. If you ask Siri if the drop in orders is true she just says, “I am sorry I can’t answer that” mimicking APPL’s official required response to the rumors. Is this a case of stock manipulation? Maybe, AAPL’s quarterly report due out this week should answer the question. The recent pileup of cases of insider trading certainly have highlighted illegal exchange of information, so a little manipulation form short sellers is also part of the equation. However, what this highlights is how easy it is to plant stories in the Age of Information and how difficult it is to discern reality in the age of new media. When the WSJ publishes an article as fact and then retracts important qualifying information, what can one expect from respected sources? In order to be timely and relevant has the WSJ, embraced Gonzo journalism? Is this the new status quo? Is fiction the best fact?
On a more positive note, the smooth transition of power and the inauguration of President Obama should provide additional short term support to the current market. Market stats are also favorable this year based on several measures including relative performance under democratic presidents and the January effect or calendar ranges. On a pure price basis we are getting a bit extended in the SPY and this week’s video will be done after AAPL reports on Wednesday.
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