AAPL is simply getting pounded day after day, and quite frankly we are surprised the ripple effect has not hit the markets harder given the stock’s >14.2% weighting in QQQ (PowerShares QQQ, Expense Ratio 0.20%) and >3.9% weighting in SPY (SPDR S&P 500, Expense Ratio 0.09%), of course the largest weighting in both respective ETFs.
AAPL traded as high as $132.97 on an intraday basis on its manic run-up heading into its quarterly earnings release and has caved in since then, today trading as low as a $115 handle in the early going which would bring it back to February lows. To put things in perspective from a “market” standpoint, the SPX was around the 2050-2060 level the last time AAPL traded here while the NDX was substantially lower than current levels, with a 4300 handle (trading 4579 currently).
What does this all mean exactly? It indicates to us that other names and/or sectors are holding the fort so to speak, but the sheer weight of AAPL given its hefty market cap implications not only in the SPX and NDX but other indices undoubtedly are feeling the pressure here as something has to give at some point.
It is hard for us to believe that the stock with the largest market capitalization in the world, covered by what is likely hundreds of analysts on the buy and sell side, would trade this inefficiently in the short term, for the stock ran up about 11% from early July into its quarterly earnings release only to give back all of those gains and then some in a matter of about two weeks, and of course as we mentioned is currently trading at February lows and the stock did not even pause at its 200 day MA this time around.
We have spoken in the past about ways to gain exposure to the Tech sector without the overweight to AAPL, and given the recent unparalleled volatility in the stock and unabated selling pressure, such ETFs should be in the limelight more than ever at the moment, although we suspect many investors still have not discovered them nor utilize them as of yet.