All Eyes On Apple

The market was lower in early trading but has since bounced back into positive territory.  The Nasdaq lagged yesterday mostly due to the weak performance in AAPL shares.  AAPL has captivated investors interest lately, as many wonder if the stock is "done"?

I think that AAPL is just going through a normal correction after a huge run.  No one points out the fact that AAPL was up roughly 75% for the year in September, which is a huge move.  It has also become heavily owned by hedge funds, so the selling and angst over this pullback is not all that surprising.  All great stocks go through corrections, and I don't think AAPL should be sold yet.  Today the stock bottomed near its November lows and has so far bounced strongly from those levels.  It also looks like it is taking the market higher along with it.

Asian markets were mixed overnight.  Japan closed higher at a 7-month high.  And a Chinese state economist suggested that the economy is stabilizing but he doesn't see a V-shaped recovery.

In Europe, S&P cut Greece's debt rating to 'Select Default'.  The ECB and BoE held rates steady.  ECB Pres Draghi said they have lowered their forecast for growth as downside risks remain.  Q3 GDP for the Eurozone was in-line at a -0.1% contraction.

In corporate news, Safeway (SWY) is the latest company to approve an acceleration of its dividend to avoid the rise in dividend tax rates expected next year.  The stock has bounced +6% on the news.  I think AAPL should do a $20 special dividend.

The dollar is higher and having a mixed effect on commodities.  Oil prices are lower near the $86 level, but gold prices are bouncing back to the $1700 level.  Copper and silver prices are higher as well.

The 10-year yield remains weak at 1.57%.  And the VIX was higher in early trade but has since faded back to the 16.45 level, flat on the day so far.

Trading comment: All eyes remain on AAPL, which seems to be having an outsized effect on trader sentiment.  AAPL is rallying today, and if it can continue to rally it should help lift the market.  Yesterday the market had staged a strong upside reversal, but some very late selling took some steam out of the strong technical action.  Overall it was still a solid bounce from the earlier lows and if the market can hang on to these early gains I think it puts the SPX in a stronger position to make a successful attempt at rallying back above its 50-day moving average.  That would likely embolden the bulls to do a little more buying.  That said, I do find this action in the market somewhat surprising given I have little confidence in any grand resolution before year-end regarding the fiscal cliff.  But I don't want to completely ignore the price action.

KAM Advisors has long positions in AAPL

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NEW Special Report: State of the Painting Industry

We are gearing up for a great 2013.  LOTS of painting business marketing tips and business growth advice to share.

For now head over to www.StartAPaintingBusiness.com and take advantage of the December discount price on the #1 Rater Painting for Profits program.  (It will become your step-by-step internal operations manual.)

I'm in the process of finishing up a brand new special report called: "2013 The State of the Painting Industry... " Insider Strategies for Positioning Your Painting Business at the TOP of Your Market.

I'll post a link on this blog when it's ready. 

For now, relax and enjoy the Holiday Season!

Andy

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Brand Strategy Reminders, Regardless of the Size of Your Company

There was something for everyone at MassTLC's recent marketing seminar - "On Brand: What Does it Take?"; if you're building a brand at a $1B+ company like PTC, or fighting your way up the ladder at a smaller company like Actifio or Verivo Software. Here are some of my keys take-aways:

1.  Something for everyone to learn (or to be reminded of)

• You need buy-in from executives:  The CEO and his/her team need to admit that there's a problem with your brand strategy, and they're on-board to fix it.
• Be realistic about the costs involved in branding:
• "The rule of thumb that we used was 2.5X the cost of our marketing investment over a 5 year period."[Jill St. George, PTC]
• Brand investment is even more critical today with the more mature Buyer 2.0. IDC recommends 50% of all marketing investment be spend on awareness building.
• Launch activities will touch many aspects of your customer creation process (e.g., collateral, web site, presentations, videos, training)
• Set targets for your branding effort
• "Prior to our rebranding effort, only 40% of our company understood our brand.  Our target penetration is 75%."[PTC]
• "# analyst briefings, web site activity metrics, social metrics"[Parna Sarkar-Basu, Verivo]
• "increase in revenue per sales rep, time to rep. productivity, # and quality of inbound leads"[Michael Troiano, Acitifio]
• Don't forget about the importance of keeping sales in the equation!
• "Stay close to sales!  They can make or break you." [Actifio]
• Include sales executives and sales operations on your team
• Tell it with stories:  Nothing speaks louder or sticks with influencers and buyers more than a good, relevant story.  Drop the MBA speak and industry terminology that all of your competitors have, and capture the essence of your company and value it provides in a story.  And most importantly, get your entire organization to communicate these stories. 

2.  Large companies

• Strive to be a "branded house" and not a "house of brands":  As Jill St. George from PTC pointed out, managing a company with many disparate brands can be significantly more costly than having a single, corporate brand.  And certainly let's not forget the confusion that a house of brands brings to your sales teams and customers as you're attempting to expand your market share and share of wallet at specific customers.
• Leverage your resources: PTC outsourced much of their brand strategy and design work (e.g., customer and employee interviews, surveys, design work) to Lippincott.  A smart move for any large company in order to rapidly leverage resources versus trying to support this type of significant effort internally, not to mention the expertise that can be attained by working with this type of firm.
• Align your branding strategy with your sales enablement strategy: Particularly in large organizations, your key to success will be rolling out a 1 to many strategy, and your sales enablement team(s) in marketing and sales can help here.

3.  Small companies

• Time is of the essence!  The good news is that you don't have as much to do as a larger company in rebranding your organization.  The bad news is that you don't have as much time or resources to accomplish your goals.  Think "months", not "years".
• Stay connected at the hip with your sales team:  Go on sales calls with the reps, if they like it or not. Test out your ideas, messages and stories with different folks on the sales team.
• Align your metrics with the company's and sales' targets. There's little time, resources or patience for brand studies, brand awareness metrics or market share analyses at a small company.  Hard line your team's metrics into sales productivity, sales pipeline and revenue targets.

Please share your thoughts below, or email me at Michael Gerard.

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New Party In China Promises Reforms

Our markets are lower again in early trading.  Traders are selling shares of AAPL which seems to be weighing on the Nasdaq the most.  One brokerage firm raised margin requirements on AAPL, but that doesn't seem to account for this much weakness.  AAPL has been down nearly 5% this morning.  I think the technical action in AAPL is not that out of the ordinary and would be a better buyer on the weakness vs. seller.

Asian markets were higher across the board overnight after China's new political party promised more economic reforms.  They indicate plans to invest in more urbanization and infrastructure as well as allowing insurance companies to invest in banks.  This helped China's stock market spike 2.9% and Hong Kong to rally +2.2%.  In other news, Australia said Q3 GDP rose +0.5%.

Europe's markets are generally higher despite another round of weak PMI Services readings.  Germany and Spain beat expectations while France  and Italy lagged.  Overall the Eurozone Services PMI came in at 46.7, which marks further contraction.  Only the UK reported a PMI reading above 50.0.

In the US, the ISM Services index was 54.7, ahead of estimates.  The ADP Employment report showed the private sector added 118,000 jobs in November, and this number was said to be hurt by Superstorm Sandy.  Last, nonfarm productivity showed an increase of 2.9% while unit labor costs fell by -1.9%, so those are both good trends.

In corporate news, Freeport (FCX) is buying both McMoRan Exploration (MMR) and Plains Exploration (PXP) in transactions totalling $20 billion.  But investors don't seem to like the foray into oil for this big copper producer as FCX shares are down -14% on the news.

Citi (C) announced plans to cut costs and improve efficiencies which will also entail laying off 11,000 employees.  Its stock is rallying 5% on the news. 

The dollar is bouncing a bit which isn't helping commodities.  Gold has fallen below the $1700 level to $1690.  And oil prices are lower near $87.80.

The 10-year yield has slipped lower to 1.58%.  And the VIX was higher earlier but has since moved lower on the day down to the 16.70 level.

Trading comment: We talked about expecting a pullback once the SPX reached its overhead 50-day average.  That is exactly how things have played out so far this week.  Currently the SPX is back in neutral territory basically right in the middle of the range between its overhead 50-day average and its underlying 200-day average.  This push and pull should continue with the same political backdrop of fiscal cliff rhetoric and negotiations.  I don't see how the market makes much headway under this scenario.  But the market has been defying the bears and climbing the wall of worry most of the year, so nothing would really surprise us at the moment.  We are staying conservative and not making any big bets before year-end.

KAM Advisors has long positions in AAPL

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Stalling At Resistance

Some of the major indexes ran into their overhead 50-day averages yesterday and were turned away.  The S&P 500 reversed lower and basically closed at its lows for the day.  That made for an outside reversal day to the downside, which often indicates some further near-term weakness.

Overnight, Asian markets were mostly lower.  The Reserve Bank of Australia lowered its key interest rate 25 basis points to 3.00%.  I'm not sure the RBA would have cut rates again if it thought China has bottomed, but the move did little to boost investor sentiment.  China actually bounced overnight, but is still trading near 4-yr lows.

Europe's markets are slightly higher today.  Sentiment seems to be improving following some progress made on Greek's bond restructuring.  That has also helped lift the euro higher vs. the dollar.

Despite the dollar weakness today, most commodities are lower.  Gold prices have fallen back to the $1700 level and are trying to stabilize.  Oil prices are lower near $88.  But copper prices are higher so far.

In earnings news, DRI is lower after reporting earnings and lowering guidance.  AZO and MTN are also lower on earnings, while TOL is bouncing after beating on revenues.

The 10-year yield is slightly lower to 1.60%.  This level or zone has pretty much acted as a floor for the 10-yr yield for the last 4 months. 

The volatility index (VIX) is breaking above its 50-day average to the 16.90 level.  We got close to the 20 level in October, but haven't actually seen a 20-handle on the VIX since July.  It would be a little uncharacteristic to see the VIX spike that much in December, which is not the highest of volatility months, but that doesn't mean it couldn't happen.

Trading comment: Lots of tests of overhead resistance.  I mentioned the SPX in the opening paragraph.  But the Nasdaq 100 also bounced from its overhead 50-day and is already back below its 200-day average, as they were pretty close together.  Another stock struggling with resistance is AAPL, which has been hovering near the underside of its 200-day average for the last week.  But yesterday it failed to get above the 200-day (near 596) and today is moving lower again.  AAPL isn't the market leader it was earlier in the year, but if it does regain its footing it would help improve investor sentiment seeing as it is still a very heavily owned stock and a favorite of investors.

KAM Advisors has long positions in AAPL

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Monday Morning Musings

Back in the saddle after being out of the office at the end of last week.  The markets finished the week on a slightly positive note in that the gains from earlier in the week held.  Now we have the tests of the overhead 50-day averages to deal with.

This morning the markets were higher in the first hour of trading, but have faded a bit after the first test of their 50-day averages.  There also hasn't been a lot in the way of market moving news.

Some of the wind behind the gains faded after the November ISM data came in worse than expected at 49.5, which is also well below October's reading of 51.7 and points to contraction in the manufacturing index.

Lots of other countries released their PMI manufacturing data as well.  China said its PMI rose to 50.6, which is a 7-month high for that reading.  The HSBC private PMI figure came in at 50.5, so these two gauges are now closer to each other.  Despite the data, China's stock market fell -1.0%.

In Europe, France's PMI was 44.5 and Spain was 45.3.  Both readings are still in the zone that markets contraction.  Spain's PM said it will be difficult to hit their projected debt target of 6.3% of GDP, and they would seek aid if needed.  Meanwhile, Moody's downgraded the ratings for both the ESM and the EFSF and maintained a negative outlook due to the credit deterioration of the program's large contributors-- namely France.

Commodities are mostly higher as the dollar trades lower today. Oil prices are higher to $89.62 and gold prices are up a bit to $1718. 

The 10-year yield is higher to 1.63%.  And the VIX is up +3% near 16.35, right at its 50-day average.

Trading comment: Last week I talked about the SPX trading right in the middle of its 50-day and 200-day averages.  Last Wednesday the SPX tested its lower 200-day support and successfully bounced off of it.  That put the senior index in position to rally to its overhead 50-day, which it has already bounced from this morning.  Usually the first test of a key overhead resistance level is not successful.  More often we see some sideways consolidation first.  As such, I would expect to see the market chop around a little in the near-term before any successful break above its 50-day average.  A successful break above said 50-day would likely also embolden the bulls and hedgies to put more money to work on the long side of the market.

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