"The stock market is a no-called-strike game. You don't have to swing at everything - you can wait for your pitch."
--Warren Buffett
Many markets around the world are closed for an extended Christmas holiday and there is limited news flow, but seasonality is positive and market players will continue to seek out speculative action.
One major problem in the early going is that Apple Inc. (AAPL) and its suppliers are down sharply on reports that iPhone X demand is coming in below expectations. According to press reports in Taiwan, Apple will cut its sales forecast for the fourth quarter to 30 million units from 50 million. This has not been confirmed by Apple but is producing a market reaction this morning and could have a big impact on the overall market mood if the pressure persists. (Apple is a holding of Jim Cramer's Action Alerts PLUS charitable trust.)
The last week of the year tends to have a positive bias, but it is also prone to some corrective action. The last two days of the last three years have seen losses. There was no mark-up action to end the year. There was repositioning and tax selling that created market pressure.
The broad market indices have been relative sedate this past week, but the pockets of speculative action have been very good for aggressive traders. It is primarily the cryptocurrency and blockchain stocks offering some good moves, but other small-caps have jumped as well.
This morning the bitcoin-related stocks have regained their momentum as bitcoin rallied to more than $15,000 last night after some corrective action the past week. That move is boosting many of the names that the critics have claimed were doomed. Riot Blockchain Inc. (RIOT) , Overstock.com Inc. (OSTK) , Seven Stars Cloud Group Inc. (SSC) and others are gapping up.
While the trading in individual stocks has been quite good, I have been concerned about some corrective action in the indices to end the year. I've been holding an index short in the form of Direxion Daily S&P 500 Bear 3X SPXS and will press that as the opportunity arises. This Apple news may be the catalyst for such a play.
This is a market that requires a two-tiered approach. There is still great opportunity and holiday trading in individual stocks, but the indices are struggling and may offer some downside opportunity for bears. Stay selective and don't let a strong market bias led you astray.
