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Can Anyone Fix the Stock Market “Glitch”?

Investors rejoice!

Your stock market losses from December were due to nothing more than a little glitch, President Trump explained during a Wednesday cabinet meeting. Once the U.S. seals a new trade deal with China, Trump assures us the market will resume its upward trajectory, possibly with a little “help” from the Fed.

Like so many investors, Trump is frantically trying to explain away the 2018 meltdown. But the market offers no refunds — even for little glitches like the one we endured last month.

Looking back on 2018, investors had nowhere to run, our income specialist Mike Burnick notes.

“2019 is bound to be different, in one of two ways,” Mike says. “Considering the high level of political, economic and monetary policy uncertainty in 2018, something’s got to give in the year ahead.”

“Either our worst fears will show themselves as overblown with 2019 delivering bigger gains than you can imagine,” Mike continues. “Or we’re headed for a global recession and steeper bear market decline. In other words, 2019 is likely to be a binary outcome for financial markets. One way or the other, it’s winner take all.”

Fortunately for most investors, Mike’s money is firmly in the bull camp. Click here to learn how you can join him on his path to fresh gains in 2019…

That’s enough with the 2018 postmortems for now. Let’s check out what the market’s doing right now…

Back in the real world, the stock market posted an impressive rally to begin the New Year — though I wouldn’t ascribe any of it to the day’s political posturing.

After opening deep in the red, the averages clawed back from the brink, sneaking into positive territory by midday before chopping around near their highs and (barely) closing in the green.

The Nasdaq Composite blazed the trail with a gain of almost 0.5% on the day, led by semiconductors and resurging tech leaders Amazon.com (NASDAQ:AMZN) and Facebook Inc. (NASDAQ:FB).

But as we’ve experienced far too often during this correction, major market-moving news can slam stocks after the closing bell…

Apple Inc. (NASDAQ:AAPL) added to the growing list of global slowdown fears last night when the former trillion-dollar tech giant cut sales expectations.

CEO Tim Cook alerted shareholders that the company would report lower than expected holiday sales numbers due in part to slowing iPhone sales and “economic deceleration” in China.

“[Cook] said the biggest issue was lower iPhone sales in China, where the slowing economy has been hit by the continuing trade war with the U.S.,” MarketWatch reports, “but also noted issues with iPhone sales in some developed economies, where iPhone upgrades were not as strong as Apple had expected.”

Apple stock was halted on the news. When it reopened, shares plummeted 8% in extended trade. Apple’s evening meltdown also dragged down shares of more than a handful of chipmakers and other key suppliers.

A Wedbush analyst — one of more than a handful who immediately cut the stock’s price target — called the lowered forecast “Apple’s darkest day in the iPhone era.” By the looks of this chart, he might be right…

AAPL

The entire market is reeling in the wake of the Apple news. Futures are in the gutter once again this morning and threatening to open near Wednesday’s lows. The Nasdaq 100 is leading the decline, dropping more than 2.5% in the premarket session.

Still no word from the Trump gang on whether this is just another market glitch. I’ll keep you posted.

Before the Apple news started tearing the market to shreds last night, some of last year’s biggest losers awakened from their slumber.

The most notable move higher comes from troubled American conglomerate and former Dow darling General Electric (NYSE:GE). Shares gained more than 6% during the first trading day of 2019 on no particular news whatsoever, capping off an impressive 20% rally of the lows.

GE

We’ve tracked the GE debacle since the stock unceremoniously decoupled from the bull market at the start of 2017 as conglomerates fell out of favor while elite Silicon Valley tech stocks soared.

When we last checked in on GE, shares had just broken below $8 to hit new 9-year lows following a brutal earnings miss and a score of analyst downgrades. One JP Morgan analyst even warned the worst is yet to come for GE shares, slashing his price target to a measly $6.

But does this week’s quick move off Wall Street’s scrap heap mean the worst is actually over for GE?

Possibly. But the stock has a long way to go before repairing the massive damage inflicted over the past two years (the stock traded north of $30 toward the end of 2016). Now that it’s revisited its financial crisis lows, we’ll need to see the stock build a strong base before getting too worked up…

Sincerely,

Greg Guenthner

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Greg Guenthner, CMT, is the editor of Rude Awakening PRO and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing for 13 years. In 2018, Greg’s Rude Awakening PRO portfolio beat the S&P 500 by 14%.

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