Apple, Dow and Euro

Apple close:    565 -16   high 644
Dow            13038 -168 high 13359
Nasd             2956 -67   high 3134
S&P              1369 -22   high 1422

If you have been reading this blog or recieving updates, you know that the view is Apple will be topping out at least for a short while. Apple stock after today's crash is off its high by a wide margin now.

Earlier this blog already states that Dow's rally cannot be sustained as observed from the chart.

Dow's fall likely triggered by a number of factors:

• Europe may have a sea change of leaders soon with France leading the pact this weekend, Sarkosy will be gone by Monday - the reason is after some three years of economic set back, not only there is no hope of a recovery, but more austerity ahead. the public usually have patience for only a 2-3 year span to any leader's policy, if it is not improving, one will be gone.
• high oil prices - this factor has been around for long, then why now, because Dow is hitting close to a three year high and texas sweet is also close to a three year high, you cannot have high oil prices unless the economy is really doing ok, if it is caused by inflation [money printing] then it will soon backfire as food on the dining table and gasoline issues eventually will impact consumer spending in other areas since income is not catching up with inflation.
• weak demand in Europe will hit us corp profits - read this blog on europe's self inflicted problem.
• unemployment - might be as high as 14-15% in actual terms but dropped to an official rate of around 8% due to a lower labor participation rate
• treasury auctions piling up - a series of auction coming soon which would take interest off stocks.

watch out S&P 1360 - a very key level if broken can go down a few percentage points and more.

Most people do not understand Europe and many short EUR and got burned. The earlier fall of euro is probably a shift and rebalancing of portfolio by the super rich and some funds after which it is more or less determined by economic factors not sovereign debt issues like most media are telling. But euro will surely go lower and very low should Europe fall into three recessions in two years which is not an impossible scenario given work ethics are low and patience of european citizens wearing thin, any continuous social unrest in a key country can drag euro much lower.

A quick and drastic fall of euro could only happen when its citizens are selling them like when Hong kong encounters confidence crisis back in 1984.

No cental bank can defend their citizens selling her only currency, this has not happened yet in europe, so euro will only fall in line with economic factors not sovereign debt issues unless the euro zone is breaking up, then the situation will be her citizens losing confidence in their own currency.