ETF Trends
ETF Trends

AAPL’s approach to all-time highs cannot stay un-noticed for much longer, for the stock continues to out-pace its benchmark indexes in the short-term, well after its initial “post earnings” vault higher. Trading with as high as a $643 handle this morning (recall the 2012 intraday, and all-time high of AAPL at $676.81), we are once again examining longer term charts in the stock to see where it has come from, where it has been, and potentially where can it go?

Underpinning everything we look at is what may be common sense to most, but still worth pointing out, is that AAPL has the largest market capitalization of any U.S. listed equity, carrying a >13% weighting now in the Nasdaq 100 (the next closest index member, MSFT has a >8% weighting), as well as the fact that AAPL has once again resumed its place as the number one ranking in the S&P 500 (above second ranked XOM), with a >3% ranking.

Relevant ETFs here that seem to be attracting short term assets likely tied with AAPL’s recent unflappable strength are SPY (SPDR S&P 500, Expense Ratio 0.09%) and QQQ (PowerShares QQQ Trust, Expense Ratio 0.20%), which have pulled in >$3 billion and >$1 billion in new assets this week via creation activity respectively.

What is incredible about the AAPL story is that the stock traded as low as a $373 handle in the spring of 2013, yes, that’s a little over a year ago, to current price levels. Some would say that Tim Cook, Apple’s CEO may feel vindicated, at least based on the impressive stock run in such a relatively short amount of time, for a large cap stock that is.

It’s safe to say that the recent break-out to new highs in broad based indices where AAPL is a major presence is not a coincidence, but it once again becomes time for portfolio managers to be cognizant of what is powering their underlying performance lately in “broad” ETFs that may be heavy holders of AAPL, and analyze the risk that may be potentially present at current levels versus future potential.

Specific strategies can be crafted not only using the stock AAPL itself, but in tandem with related ETFs as well as options on such ETFs if not listed options in AAPL itself. We expect to see activity in this sense to heat up considerably in AAPL and related ETFs for instance as we approach the mid-point mark of 2014 with the first week of June trading beginning next Monday.

Other AAPL “heavy” ETFs that should remain on the dashboard for AAPL holders right now include IYW (iShares U.S. Technology, Expense Ratio 0.48%, >17% weighting), XLK (SPDR Technology Select Sector, Expense Ratio 0.16%, >14% weighting), FTEC (Fidelity MSCI Information Technology, Expense Ratio 0.12%, >14% weighting), IXN (iShares Global Tech, Expense Ratio 0.48%, >13% weighting), VGT (Vanguard Information Tech, Expense Ratio 0.14%, >12% weighting), and JKE (iShares Morningstar Large Cap Growth, Expense Ratio 0.25%, >10 weighting).

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