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Apple Product Parade Returns Stock Market's Focus to Big Names

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September 9, 2015

Bullish stock market news bubbled first in Asia Wednesday when Japanese authorities raised the prospect of deeper corporate tax cuts and Chinese officials unveiled additional economic stimulus via tax cuts and infrastructure spending. But today’s story might get micro, real fast. If there’s one individual stock that can grip the entire market with news, it’s Apple (AAPL). The tech giant is in the spotlight today.

Apple is expected to unveil the latest versions of the iPhone, the 6S and 6S+, at an event in San Francisco. Industry analysts think upgrades could include sharper cameras. The rollout could also include a function called Force Touch (already used in the Apple Watch), which allows users to open features by pressing harder on the screen.

Then comes the industry speculation. AAPL could introduce a bigger iPad and the opening of Apple TV to third-party app developers. There’s also industry buzz around an expected tricked-out Apple TV with Siri capabilities. But according to news reports, a larger iPad and an Apple streaming-TV package may be on hold until next year depending on which Apple analyst you ask.

Some market anticipation rises and falls with analyst industry checks. Bullish analysts claim there’s a large base of iPhone users eagerly awaiting the rollout for an upgrade. Others think the iPhone anticipation is overblown and that the best chance for a new surge in demand could come with a new AppleTV and a larger iPad.

Debate remains over how big AppleTV can be? The Company Profile feature on TD Ameritrade’s thinkorswim® platform indicates this source is less than 1% of AAPL revenue.

Adding to late-summer volatility, CEO Tim Cook last month provided a rare off-script update when he issued an email to CNBC’s Jim Cramer saying iPhone activations had accelerated in recent weeks.

Quite the Month

The valuation debate wages on, too. AAPL shares rallied 2.8% on Tuesday, restoring nearly all the 3.5% drop last week (figure 1). Shares shed over 6% for one month through September 2. Keep in mind that showing still outperformed the S&P 500’s (SPX) 7% retreat in the same span.

Short-term options positioning tracked on TD Ameritrade’s thinkorswim® platform shows a 1.7% share move, in either direction, is priced in to AAPL shares as the market awaits today’s event.

FIGURE 1: APPLE’S YEAR.

One-year chart of Apple (AAPL) shares. The stock sits down some 16% from the high hit in the spring. Data source: CBOE. Chart source: TD Ameritrade’s thinkorswim® platform. Not a specific recommendation. For illustrative purposes only. Past performance does not guarantee future results.

Other Potential Movers

In the same space (sort of), Amazon.com (AMZN) made news earlier this week on reported plans to release a cheaper $50 tablet with a 6-inch screen, in time for this year’s holidays. According to The Wall Street Journal, the release—likely to scrimp on screen quality and battery life—would be one of the least-expensive tablets on the market and half the price of the company’s current Fire HD 6-inch tablet.

The $50 device is part of a slate Amazon is planning to release this year that will also include tablets with 8-inch and 10-inch screens, according to the WSJ, which cited unnamed people familiar with the rollouts.

The content and streaming space is changing for other major participants. Netflix (NFLX) said this week that it intends to launch its TV and movie streaming services in South Korea, Singapore, Hong Kong, and Taiwan early next year. The news comes after Netflix entered Asia last week by opening in Japan and as it has said it’s sniffing out its options in China. By the end of 2016, Netflix has said it wants to be in 200 countries.

Stay tuned, Apple muscle can influence much beyond its own share price. But it’s also true that a volatility-weary market (figure 2) might appreciate a refocus on company names over global market waves, at least for a short time.

FIGURE 2: HOLDING 1900.

The S&P 500 (SPX) has held the psychologically important 1900 line so far this month. Data source: Standard & Poor’s. Chart source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Good trading,
JJ
@TDAJJKinahan

NC
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