While the Bank of Japan caught my attention this week, there’s only one name that you need to know for the next five days.
No, not Jerome Powell (the Fed will likely raise rates on Wednesday).
And it’s not President Biden, who just announced his reelection campaign.
The answer is Tim Cook, the CEO of Apple Inc. (AAPL).
Next week, the technology giant will report quarterly earnings.
Wall Street expects that Apple will report Fiscal Second Quarter earnings of $1.43 per share on top of $92.1 billion in revenue.
To put that latter figure into perspective, Apple’s quarterly revenue is about the same as the annual GDP of Sri Lanka.
But that’s just one of the stunning figures about Apple that you need to know.
Apple Stock is the Market
I’ve said, “So goes Apple, so goes the U.S. market.”
I’m not kidding.
It doesn’t take much analysis to accept this premise. Apple comprises more than 11% of the weight on the Nasdaq 100. It represents about 6.2% of the weight of the S&P 500.
And it’s a big component of the Dow Jones.
It’s part of more than 400 exchange-traded funds. And the market capitalization is larger than the gross domestic product of all seven nations. So, it’s a big deal.
And when it moves in dramatic fashions, the market will turn quickly alongside it.
Let’s look at a chart of the The S&P 500 (SPX) and its performance compared to the returns of AAPL over the last six months.
You can see that the movements in Apple align and direct the performance of the broader index. Apple is up 7.3%, compared to the -1.2% return for the SPX. And it’s clear that as Apple moves up and down, the SPX likes to follow.
That shouldn’t be surprising.
But let’s look at the last FIVE YEARS.
This is up 313.8% compared to the SPX’s return of 54.62%
And the same goes with the Tech heavy Nasdaq 100.
Apple has blown away the performance of the tech-heavy Nasdaq 100 ETF (QQQ), dubbed the “Innovation Index.” It’s up more than 313% compared to the 96.5% return for the QQQ over the last five years.
When Apple pulls back… the QQQ suffers. But when Apple outperforms, the QQQ follows.
What should this tell you?
First, it’s the most important stock in the market, with the largest weight and the biggest influence on the indices that most people like to day- or swing-trade..
More important, it should make us question WHY people would choose to trade the SPY or the QQQ over Apple stock.
If AAPL is moving like this… drastically outperforming the market, then why are we ignoring the real trading possibilities of just this name.
It’s possible just to trade Apple (and only Apple) – and do it very successfully.
To your wealth,
Garrett Baldwin
**This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
Market Momentum is Red
We are clearly in red territory, and Tactical Wealth Investor members see our position on the S&P 500 SPDR ETF (SH) heading in the right direction. We’ll catch up next week ahead of the Fed meeting and discuss the impact of tech over the next 15 days.
