9:05am (EST)
It was a choppy session on Wednesday as the market darted in-and-out of positive territory for much of the session before finishing slightly higher. The bulls holding support was a bigger deal than yesterday’s slight gains but oil continued to work its way higher and it’s something we are watching very carefully.
The Dow was up 9 points and closed at 12,066 after touching a high of 12,115. We were looking for a close above 12,100 but were pleased to see 12,000 hold after 12,200 gave way earlier in the week.
The S&P 500 finished at 1,308, up 2 points, after touching a high of 1,314. The index traded to a low of 1,302 but 1,300 held again on a closing basis so the bulls will take it.
The Nasdaq showed the most strength as the index advanced nearly 11 points to 2,748 after trading to a high of 2,763. We were hoping for a close above 2,750 as the index continues to work its way back towards 2,800.
The market has been in a “tight range” for 2 weeks so we either stay in it or breakout to one side or the other, probably depending on the price of oil and the seriousness of geopolitical violence going forward. If oil can trend back to $90 and tensions ease, then we will soon get a blow-off the roof type rally for the market which we really haven’t seen yet. We think things can play out this way over the next few weeks as we start to look forward to April which is when 1Q earnings come out.
Yes, we are still in 4Q season but this could be another catalyst that the bulls are looking forward to and we said back in November this rally could last until April.
On that note, it looks as though Apple’s (AAPL, $352.12, up $2.81) iPad 2 is going to be a monster. The company already owns a 90% market share for tablet devices and it’s hard to imagine them growing that number, but, what is not hard to imagine is that they won’t lose that much of their current market share anytime soon. From April thru December 2010, Apple sold 15 million iPad’s which generated $9.5 billion in revenues. Nobody else is even close.
The new iPad 2 is slimmer, sleeker, and full of new upgrades. We are already seeing the adoption of Apple’s iPad in the corporate world and the company’s FaceTime video conferencing feature will surely be a hit as it is with the iPhones. Speaking of which, Apple said yesterday they have sold 100 million iPhones since launching, and, iBooks has passed 100 million downloads in less than a year. Incredible numbers.
One company that wasn’t celebrating the Apple news? Zagg (ZAGG, $7.07, down $2.23), which dropped nearly 25% after Apple said that its new iPad will feature a “smart” cover. This was a major blow for a company that makes protective shields for Apple’s iPad and iPhone.
Shares of Zagg opened at $9.27 yesterday and had been flat up until Apple’s big announcement. As far as the options, quick traders were all over the March 9 puts (ZAGG110319P00009000, $2.00, up $1.45) which surged over 250% after Steve Jobs dropped the bomb. The put options closed at 55 cents on Tuesday and opened Wednesday’s session at 60 cents. Pretty good day for those who got in and out on the news…
Obviously, the easy money has been made in Zagg but Apple still looks like a “good buy” at current levels for the long-term investor. The only thing we wish for besides an iPad2 is for Apple to do a 10-for-1 stock split so option prices get cheaper. Folks, if you haven’t gotten an iPad, go try one. We love them and use them a lot. We can’t wait until March 11 which is when the iPad 2 becomes available.
Futures are pointing towards a big open this morning: Dow (+85) to 12,131, S&P 500 (+12) to 1,318, Nasdaq 100 (+20) to 2,343. Subscribers, check the Members Area for the updates.
]]>