Key Bitcoin And Equity Dynamics To Watch Right Now
S&P 500 rallies with strong Apple earnings and short covering. Bitcoin shows some volatility but historical volatility still at record lows. The market is caught between bear rally and larger unwind.
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Apple Carries The S&P 500 Index
Despite a brutal showing in Q3 tech earnings this week, the S&P 500 index is currently rallying on the back of Apple’s performance, who were one of the few who had a positive earnings reaction. At the time of writing, Apple is having an 8% intraday rally move. Along with Amazon’s original 20% drop after Thursday earnings (along with poor Microsoft and Facebook earnings earlier this week), the cracks are showing on how illiquid and volatile this market can get for the world’s largest companies. This cycle started with bitcoin but now it has progressed to bonds, currencies and blue chip tech equities. We already knew bitcoin would be volatile but now everything else has caught up. Proceed with caution.
Although coming down from the last two years, Apple’s weight in the S&P 500 index is still significantly higher than any other company or industry in history. It likely will be the last domino to fall in taking the market lower.
Source: Bianco Research
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As the market generals are now figuratively being shot (META, AMZN, GOOG), Apple is the lone wolf of the mega-cap tech sector that continues to defy gravity. Relative to the Nasdaq 100 index, shares of Apple have never been more valuable. This type of concentration among the top of the indices is not the sign of a healthy or structurally sound market.
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