The Economic Recovery has Already Come and Gone — S&P 500 to Follow Apple’s Bear Market
The Standard & Poor’s 500 Index has fallen 7.7% to 1353 in the two months since its multi-year peak of 1465 on September 13, 2012 — dragged lower by flagging corporate-profit performance and, of course, the rampant anxiety about the tax-and-spending Fiscal Cliff standoff in Washington.
The last time the index was in this immediate neighborhood was July 26, 2012 — when it closed at 1360, having already dropped 10% to 1278 in May and June of 2012.
During the 2012 summer retreat, investors were consumed with the threat of an economic slowdown here and in China, as well as European authorities’ ability to counter the debt crisis there.
The headline S&P 500 is now as “oversold” == or as far below its intermediate-term trend — as it was at the market lows in late spring of 2012, and all 10 of its industry sectors are appreciably below their three-month trajectory. When such extremes are reached, it tends to mean that the market should soon at least bounce, and if it doesn’t, the decline could get out of hand quickly.
The S&P 500 VIX index of protective-options pricing has remained unusually subdued during the market drop, defying its typical tendency to surge in nasty markets along with investor fear. While this could imply that sophisticated traders are loath to price in major immediate losses, similar action in the past has also occurred in the midst of treacherous bear markets such as in 2000.
Every financial era has its signature stock. It’s a company that defines an era. For market bulls who own stock in Apple (Ticker Symbol: AAPL) that could be bad news. Since early October Apple stock is down over 20%. Recently the S&Pc500 started a slide of its own, dropping 7% from recent highs. The question for investors isn’t whether or not Apple stock can regain its mojo, but whether Apple is the canary in the coal mine signaling a 2013 stock market crash and economic downturn.
Apple may be a sign that the economic recovery has already come and gone. Unless Apple can find a way to get traders excited again the company’s great bull run will be over.
Tags: 2013 Stock Market Crash, Apple, Apple Stock, Apples Bear Market, Bear Market, Economic Downturn, Economic Recovery, Financial Era, Fiscal Cliff, Oversold, Protective Options Pricing, S&P 500, September 13 2012, VIX