It was a tough day for the markets on Friday. Some say it was earnings. Others say it was the 25th anniversary of the 1987 crash. I say that there is a good possibility that it was a one day blunder and will have no linkage to how the markets trade today.
Just as a matter of stock market trivia, the 19th of October has not been market friendly for the last few years. I think it is one of those self-fulfilling prophesy types of trading days:
2008 N/A – weekend (I bet it would have been a real lousy day – the first three weeks of Oct 2008 were down 18.12%)
Earnings will really hit a fevered pitch this week with Apple (AAPL) batting in the clean-up spot on Thursday after the market closes. Given how that stock has traded, expectations are quite low for that tech company. I went to my local Apple store on this weekend. It was busy as always. I think that the rumor of iPhone 4s models still selling well with preference over the iPhone 5 is just plain false. Forget that notion. According to what I was told, very few 4ses are moving out the door. There are no 32-gig iPhone 5 models in stock; so instead of losing a sale, the sales people just tell you to order it online. Hence, I did not get my 5 that day.
I came into the month fully expecting some weakness or sideways action. For the month, the S&P 500 (SPX) is only off about ½%. It is the Nasdaq 100 (NDX) that because of AAPL and Google (GOOG) is off over 4% for the month. The problem is that too many people pray at the altar of the NASDAQ and don’t respect the SPX for what it is – an index that is more representative of investor, corporate and national wealth. In the final analysis, October is shaping up pretty much as I expected and it usually does.
All of the above is noise. These are all under-card bouts for what is the main event on November 6. To me that could be a make-it or beak-it for the markets. I have moved my odds on the election now to 2-1 against Romney. Weekend polls could move the race even closer.
I raised my cash position to 5% on Friday but see no urgency to put that to work until the election is settled.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was AAPL and GOOG stock and calls — although positions can change at any time.
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant and agricultural stocks. You can subscribe at www.restaurantstox.com
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