A Tale of Two Earnings Cities and Biting the Apple

The opening sentence in the Charles Dickens classic, “A Tale of Two Cities” says that, “It was the best of times, it was the worst of times.”

This week, I’ve heard more than one market commentator describe the plethora of earnings over the past fortnight as being a “a tale of two markets.”

In one bullish earnings city, we’ve had very strong earnings from defensive and “old school” industrial bellwethers such as Caterpillar (CAT), Exxon Mobil (XOM), General Dynamics (GD) and McDonald’s (MCD) to name just a few standouts.

Oh, and if those names sound familiar, it’s because they are all members of the Income Multipliers Portfolio, and their respective share price increases of the past couple of weeks have put a smile on my face.

In another bearish earnings city, we have mega-cap technology bellwethers, where we saw big earnings misses and/or downbeat outlooks from Alphabet (GOOGL), Amazon.com (AMZN), Meta Platforms (META) and even Microsoft (MSFT).

One notable tech bellwether that bucked the trend is Apple, Inc. (AAPL). Although the company reported a slowdown in iPhone 14 Pro sales and some pressure on its services business, it still did extremely well on both revenue and earnings per shares. Easily beating expectations on both fronts. In my opinion, this company is one of the best-of-breed tech stocks to own right now (more on that in a moment).

The result of this week’s price action in the broad market has the S&P 500 on pace for a gain of about 3.1%. The Nasdaq Composite is also on pace for a weekly gain in the neighborhood of 1.5%, and that is despite the mega-cap tech wobbles. Yet when it comes to major indices, the clear winner is the Dow, which is on pace for a weekly gain of some 5.2%.

Now, I mentioned Apple a moment ago, and as you can tell, I am bullish on this bellwether. So much so that I think it’s time to add AAPL to our Tactical Trends Portfolio.

So, as soon as you receive this email, I recommend the following action:

Buy Apple, Inc. (NASDAQ: AAPL) at market with a protective stop set at $132.00.

Our official buy price will be based on the time this email is sent.

Given the latest rebound in AAPL shares (up 7.5% this morning post-earnings), I think we are in for more upside ahead, especially when you consider shares are down 12.4% year to date, and that we are still just below the 200-day moving average (see chart above).

I think that with a good fourth quarter, traditionally Apple’s strongest, we could see shares race back up to $180.00, or just about to the January high. That represents a gain of approximately 15% from current levels.

So, if you want to put some money to work in a best-of-breed stock, then I recommend you take a bite out of the Apple in your Tactical Trends Portfolio.

I’ll have an update on the official buy price of AAPL in next week’s hotline.

Until then, we’ll keep watching this tale of two earnings cities, and we’ll continue watching all the action for additional investment opportunities.