foxex: Apple Shines

The Market Sum | Insight after the bell

By Caleb Silver, Editor in Chief

Thursday's Headlines

U.S. Market Shines as Apple Rises

Markets Close

Dow
25,962.51 +0.84%

S&P
2,854.88 +1.09%

Nasdaq
7,838.96 +1.42%

VIX
13.63 -2.01%

INV Anxiety Index
98.61 Low Anxiety

US 10-Yr Yield
2.537 +0.08%

Apple Shines up the Market

There are a few stocks out there that have the ability to lift or sink the entire market, and Apple is one of them. Today, the iPhone maker popped 4% following an upgrade from an analyst at Needham & Co, who rated the company a 'Strong Buy', citing its "undervalued ecosystem".

Translation: Apple is being undervalued given the sum of its parts.

In reality, nothing has materially changed in Apple's outlook. Remember, at the end of 2018, Apple brought down its own forecasts for 2019 citing weak demand, particularly in Asia. Its new iPhones were not selling as well, and the slowdown of China's economy was going to make things even worse. That hasn't changed.

What has changed is that Micron Technology, a key supplier of semiconductors to Apple and other phone makers, reported its earnings Wednesday afternoon, and its CEO, Sanjay Mehrotra, told investors that Micron sees a rebound in orders and demand in the second half of 2019. That was enough to boost shares of Micron almost 10% today. If Micron is seeing demand, that must mean Apple will as well.

As for Apple, it has rallied 9 out of the last 10 sessions. Its stock has crossed a key technical threshold that James will walk you through in our daily chart, below.

As for its impact on the broader market, remember that Apple is the second heaviest stock in the 'market weighted' S&P 500, next to Microsoft. Here are the top ten, courtesy of slickcharts.com.

What's Next

Apple just announced a press event for March 25th in Cupertino, CA (the company's home base). The company is expected to roll out its new streaming service with original shows, as well as content from other providers including Showtime and Starz. There are other reports that suggest that Apple will roll out a new subscription service for Apple News, as well as a new iPad with a bigger screen. Kinda perfect for a new video subscription service, right?

There Go Mortgage Rates

We wrote yesterday about the Fed's decision to not raise interest rates for the rest of 2019 and how that will impact mortgage rates and spur the housing market. Well, mortgage rates have been impacted. After climbing steadily for most of 2018 and the last two months, rates took a dive yesterday. Check out this chart from Zillow.com which shows how mortgage rates in the U.S. started peaking into the Fed announcement, and then abruptly fell out of the sky when Powell announced no more hikes for the year.

More News:

Biotech Funds Could Generate Profitable Short Sales

CVS Selling CBD Products, Curaleaf Stock Skyrockets

3 Securities to Watch After the Fed Decision

You would expect homebuilder stocks to rally in concert with falling mortgage rates... and you'd be right. Take a look at the 5-day chart for XHB ETF, which tracks the biggest homebuilders in the U.S. It looks just like mortgage rates, but in reverse.

Facebook Overshares

More sharing, more problems for Facebook. A report from cybersecurity journalist Brian Krebs revealed that Facebook employees had unprotected access to over 600 million usernames and passwords that were not encrypted. The hole in Facebook's encryption dates back to 2012, but wasn't discovered until recently. Facebook confirmed the issue in a blog post today, telling users:

"As part of a routine security review in January, we found that some user passwords were being stored in a readable format within our internal data storage systems. This caught our attention because our login systems are designed to mask passwords using techniques that make them unreadable. We have fixed these issues and as a precaution we will be notifying everyone whose passwords we have found were stored in this way..."

Facebook says there is no evidence that any of the private information was accessed by anyone or used inappropriately, and it will be sending out notifications to 700 million of its 2.7 billion users notifying them of the issue and telling them to change their password.

It's yet another example of Facebook being unaware of the holes in its platform and demonstrating that it really can't guarantee that user's personal information will be protected. Use at your own risk.

Chart of the Day: Apple's Surge Slices Through 200-Day Moving Average

Apple Inc. (AAPL) gained an impressive 3.68% on Friday, slicing through its 200-day moving average and closing above the widely-watched indicator for the first time since mid-November. Besides being buoyed by a very bullish overall market after Wednesday's highly accommodative Fed decision, buyers rushed into Apple's stock ahead of Monday's much-hyped "it's show time" event.

During this event, Apple CEO Tim Cook is expected to unveil two new subscription services – a video service that will compete with Netflix and Amazon, and an all-in-one news service for iPhone and other Apple devices. Ahead of this special event, major research firms upgraded their ratings and/or targets for Apple's stock, including Needham, which upgraded AAPL from a Buy to a relatively uncommon Strong Buy. Needham also raised its price target for the stock from $180 to $225.

As the chart above shows, Apple has been rallying off its lows since early January after taking a massive tumble from its all-time high in the fourth quarter of last year. If the stock is able to maintain its position above its 200-day moving average, the potential for a full recovery and return to a bull market becomes increasingly likely.