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Apple Death March Continues

Stocks in this article: AAPL

NEW YORK ( TheStreet) -- The Apple (AAPL) death march, mirroring the 2009 end-of-year action, continues. All those investors who are loaded up on January out-of-the-money calls -- in hopes that the Verizon, China, iPad/iPhone, MacBook Air, Apple TV and earnings catalysts will lift the stock -- have failed to identify the current market trend and have failed to accurately interpret historical precedent. We are in a very difficult investment environment right now and must invest accordingly. Consider the following market moving news items of the day:

  • WikiLeaks is set to release Enron-like internal documents from a major U.S. bank sometime early next year. As if the banks didn't already have enough to worry about because of the foreclosure fiasco, now investors are going to deal with the uncertainty as to which bank will get hit. The path of least resistance is to the downside for banks.
  • European contagion fear increased after the Irish bailout. This is adding fuel to the market correction even if its effect is exaggerated by over-eager bond traders. It looks like Europe debt contagion will continue to be utilized as a primary driver whenever the market is in need of a technical correction.
  • The market is no longer certain that U.S. tax cuts are coming in 2011. President Obama is meeting with both sides to discuss the issue. So far, we see Democrats taking a hard line stance against the pro-growth policies.
  • Bad sentiment surrounding banks, Europe, and tax policy is not a good thing for the stock market. As we measure the pulse of the market's new identity in Stage Three of the recovery, we are hoping to get a clear picture of its new trading range. During Stage Two, the Dow liked to dip into the 9,000s before investors were compelled to buy. I doubt we will go that low in Stage Three. This should be a period of higher lows and higher highs but we will have to wait and see how low this selloff takes us.

    Actually, the 2009 Apple comparison could be setting up quite nicely. During that death march, the only productive time to own Apple was from the Dec. 7 low of $188 until it reached $209 on Dec. 24. If we can get an entry below $300 during the first 10 days of December, we will be compelled to buy.

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