It is said to kill the snake you must cut off its head.
said to kill the snake you must cut off its head. Probably wise advice especially if it’s a poisonous snake. Just make sure you bury the head afterwards, so says a rancher friend of mine. Otherwise, the meat bees will eat it and if you then get stung by one, you could be in trouble.
Nice to know but what does that have to do with the stock market?
Actually, the snake example does have its lesson.
There are many signs a prolonged market rout has a chance of ending.
Technical analysts look at price charts for clues while the macro guys look at what is happening in the overall economy to see where things might be headed.
The blue light special shoppers called the “value investing” gang compare where the stock was and where it is now. The more beaten up the better so say the value investors. After all, a stock that used to be at $400 must be a buy at $100 right?
There are many other signs and clues that are tossed about on why or why not the current market ills should or should not end anytime soon.
To this analyst, one signal an end might be near is the head of the proverbial snake must be cut off and buried.
What I mean by this is the market leader(s), the most popular of stocks and the most well-known, must fall out of bed and get creamed once and for all.
In my own words, the King snake, the most popular and resilient stock, must have its head lopped off and buried along with the rest of the market.
Now stay with me here.
Arguably, one stock comes to mind as “the stock”, the most popular and well-loved stock of them all in recent years, if not decades, and it is…………… you guessed it:
Keep in mind I said “arguably”.
There are many other great stocks and probably just as well known, but Apple, at least in my mind, is the most loved stock of all.
Apple is indeed a great company. It may not be at its pinnacle which, in my opinion, was when Steve Jobs ran it, but his successor and the current CEO, Tim Cook is nonetheless brilliant.
He has continued to, if not innovate to the degree that Jobs did, steer Apple to the cash juggernaut it is today, which is to say, it is cash rich and generates gobs of it.
Needless to say, it also controls a vast portion of the lucrative smartphone market as well as all the ancillary businesses related to it.
Although one of the largest companies in the world, its stock has not been immune to some significant turbulence. But in the opinion of many, including myself, it has not been trampled into the dirt and had its head severed like so many of the other popular stocks have.
Recently on CNBC I heard an analyst say as much by stating something like “until Apple gets crushed as the last stock standing to fall and fall hard, this market may not be done to the downside”.
I couldn’t agree more. Various price levels of Apple stock originally on my charts showed a 138 level as major support early on in 2022. That came and went a few times, down from its all-time high of about 182 in early January 2022.
Then, in June, it breached 138 to the downside, only to rebound again the rest of this year. That was until last week when it briefly dropped all the way down to 125.
It bounced up and off that level rather convincingly in the last day or so but looking at the historical price action dating back a year or two, I can’t seem to get the numbers 120, 110 and even 100 out of my head.
Although Apple is down 30% or so off its all-time high, I am of the opinion that market routs end violently and not with a whimper. And so far, I think the final capitulation sell-off of Apple stock is yet to be seen, although the brief fall to 125 was ugly to say the least.
Keep in mind no one can forecast market direction at any time. But to this analyst, the snake’s head may not be quite dead and buried just yet.
“Watching the markets so you don’t have to”
(As mentioned please use the below disclaimer exactly) THANKS (Regulations)
This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His website is moneymanagementradio.com, and was recently voted Best Financial Advisor in Nevada County. 530-559-1214.