Tuesday, October 19, 2010

AAPL selloff and Solar Stock slide

Our short-term prediction of solar-stock-peaking has come true, with the solar ETF (TAN) dropping from $9.22 to $8.42 (-8.7%) since our prediction on Thursday morning, 3 trading-days ago.

We also noticed the same "Buy on the Rumor and Sell on the News" effect with AAPL today. Despite "blow-out earnings" that handily beat analyst expectations after the close yesterday, the stock slumped more than the market today, down -2.68% (dropping as much as -6.5% after hours following the earnings release).

How would you have known that AAPL investors were excessively-optimistic (besides the obvious mania of Apple-true-believers, who might not actually own the stock)? Glad you asked - our Stock Sentiment Cluster showed that excessive optimism going into earnings. Interestingly, there was heavy Call Option writing (selling) going into earnings yesterday as well, indicating large institutions hedging the risk of a disappointment.

Happy Investing!

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