Stocks rally despite Apple flop
Stocks in the US got off to a slow start after experiencing a 2% rally during the first two days of the week. Volatility has been drained from the US markets in light of the issues related to potential military action in Syria. Investors had priced in a targeted attack on Bashar al-Assad, which seems to be going the route of a diplomatic solution.
The Nasdaq 100 hit a new multi-year high on Tuesday as investors flock to technology stocks, despite disappointment with Apple’s (NASDAQ:AAPL) product launch. The Dow was the best performer of the major indices climbing 135 points to notch the weekly total up to 404.
During the Asian trading session, Apple made a number of announcements that show the reach of their business lines, but no carriage deal which led to a number of downgrades. A deal between Apple and China Mobil appears to have moved closer after the US company received a license for its phones to operate on China Mobile’s 3G and 4G networks from the country’s Telecom Equipment Certification Center. Apple’s products also obtained licenses to run on the infrastructure of China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA) , both of which will sell the two iPhones that were unveiled yesterday. The deal with China Mobile (NYSE:CHL) will open up a market of 700M subscribers, but the cost of the low end phones are expensive which might not bring in a cost conscious consumer.
Volatility as reflected by the VIX index has decline as a military strike on Syria seems to have moved to the back burner. With the S&P 500 index rising for the third straight trading session, investors have been complacent and have veered away from purchasing protection.
Price action on the large cap index is likely to test the recent August highs near 1710. Momentum is strong with the MACD (moving average convergence divergence index) printing at its highest levels since mid July.
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