Posted February 20, 2012 15:34
This week in the market, the market seesawed between positive to negative percentage moves. When the market fell this past Wednesday it seemed as though the market was heading for a serious correction.
In the morning, Apple was at an astonishing $530 and that’s when the unimaginable happened. Apple stock just collapsed; the stock fell to $520 and in a matter of minutes fell to $510 and by the end of the day, Apple stock closed at $497. The result was reduction and elimination of long positions and some investors actually initiated or added to their shorts (only a few people are brave enough to short Apple).
Over the past few weeks, Apple had skyrocketed from $450 to $520. This pullback shouldn’t shock any investors mind. A shooting star technical pattern almost always entails a sharp, 3-5% pullback (sometimes even more).
A shooting star is when a stock jumps a sharp percentage in a matter of days or weeks. But, Apple still remains a buy and in the long run should give investors an exceptional return on their money, especially if Apple gives a dividend. (One of the main reasons Apple rallied was due to the hype of an Ipad 3 and the anticipation of a dividend).
Over the next few weeks, the market is expected to be very volatile, especially, with the VIX bouncing above and below the 20 mark. One of the main indicators is shown in the stock $TVIX. This stock tracks the VIX options and the VIX index and has been very volatile. The percentage moves in the stock over the past few days has been over 50% from the high to the low. Just a few weeks ago, the stock was at $14. A few days ago this stock has moved to a high of $21.
The one thing that should still be lingering in investor’s minds is the fact that the United States and Europe face many problems ahead. As an investor, it is important to never forget the pain of the ’87 and ’08 crashes.
I like to my portfolio to be filled with anti-recessions stocks. Stocks that can fit in this category are:
KO, MO, T, VZ, NLY, JNJ, LQD (bond ETF, this stock has a great yield and has almost no volatility)
