Apple Closes Over $600 As Trading Volume Collapses Again

Tyler Durden's picture

"Whocouldanode?" that Apple would do something like pay a de minimus dividend and begin a modest buyback program? Indeed, initial reactions for the stock seemed to be 'sell the news' but of course, it wouldn't be a day ending in 'y' if Apple didn't close green and sure enough, with seconds to spare, Apple managed to close over $600 for the first time. BofA, not so much. After pinging $10 (a healthy double of recent lows), chatter of a secondary began the process of 'normalizing' its recent behavior (the stock is still up 17% post JPM-divi/Stress test news, a whopping 10% better than any of its peers in that 4 day period). The leak in financials dragged on the S&P which limped back lower to close almost perfectly at its VWAP as NYSE trading volumes (after almost record-breaking high levels on Friday OPEX hedge removal day) dropped back to near their lows . Credit outperformed equities today but its a very 'technical' day for credit in general with the CDS/index rolls tomorrow (meaning the major credit indices will move to new maturities and new components) though HYG staggered notably early in the day. USD and Treasury weakness were the headlines of the day (aside from AAPL of course - which apparently has a great new screen) which of course helped commodities rally with high-beta Silver the best on the day +1.2% from Friday and WTI breaking $108 as Gold limped higher (tortoise-like) over $1660 at the end. VIX rose once again and the term structure flattened a little but once again post-OPEX and futures roll, there are some more difficult apples-to-camels comparisons there.

HYG (green) dropped rather notably in the late morning (around the time of the European close) but staged a magnificent comeback as stocks limped higher overall. Whether this was overnight hedged into the credit roll that was snatched up by ETF arbs or just another algo save is unclear. We would expect anyone who needed to hedge to use HYG more than HY today heading into the roll. HY and IG stayed in sync as we suspect reracking off stocks and very light flows into the roll left them dangling near their intrinsic values.


Financials lost their loving feeling as BofA slid over 6% off its intraday highs. We noted in an earlier tweet that BofA has huge amounts of TLGP debt due in the next few months (which are on the books at exceptionally low costs of capital). We note they got a smallish 5Y deal off today at T+275bps so unless they are planning on another juicy DVA spread play, earnings will take a notable hit in Q2-3 from significantly higher debt costs. Of course, post JPM, BofA remains the huge outperformer so why not use this dislocation to raise a secondary...seems unlikely though that they could issue bonds today and not disclose some kind of secondary is coming but then again- MF Global...

Silver was the big winner on the day as Copper and Oil rekindled their synchronicity and Gold underperformed USD's weakness on the day managing only +0.25% from Friday's close.

Treasuries managed a decent overnight rally but as activity picked up this morning so Treasury yields popped higher again - up 7-8bps from Friday's close with the 2s10s30s (or the hump-shape/butterflies that twist seemingly pressured down) coming unwound en masse as 2Y outperformed and 7Y underperformed.

We can't help but feel like a lot of short-squeeze / hedge ammunition has been taken from the market post-OPEX (volumes were crazy on Friday, VIX has been leaking higher again, and credit protection buyers won't enter heavy until after the roll now) as the Greek CDS auction went off without a hitch (as we said it would - and did during LEH) and all those crisis hedges set for MAR expiration at the start of the year died out of the money.

NYSE Volume is 25% below Q1 2011 levels on average. The volume traded on Friday was exception all by any measure and yet today we fall back to our old patterns of low volume limp higher.

Today was also the highest average trade size for the ES (S&P 500 e-mini futures contract) since July 1st 2011 - dramatically higher than recent average levels.

Charts: Bloomberg

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evolutionx's picture

Summer 2012: Iran war, crash in the markets and financial institutions


five devastating storms will mark the summer of 2012 and thus accelerate the process of world geopolitical swing:

  • . US relapse into recession against the background of European stagnation and BRICS slowdown
  • . dead end for the central banks and interest rate increases
  • . storm on the foreign exchange and Western sovereign debt markets
  • . Iran, the war « too far »
  • new crash in the markets and financial institutions.


Full Analysis:

slaughterer's picture

From Bloomberg:

HSBC Holdings Plc (HSBA), Europe’s biggest bank, sold $35.3 million in structured notes tied to Apple Inc. (AAPL), the largest such offering in the U.S. in almost 14 months.

The one-year securities, issued through the firm’s HSBC USA Inc. unit, return 7 percent annually with investors at risk of losing their principal if shares of the world’s largest company by market value fall by more than 7.6 percent, according to a prospectus filed with the U.S. Securities and Exchange Commission. Bank of America Corp. (BAC) distributed the notes for a 1.75 percent fee.

Banks have sold $191.4 million in notes tied to Apple this year, 77 percent more than the first quarter of 2011, Bloomberg data show. The maker of iPhones and MacBook Air laptops rose 81 percent in the past year, while information technology stocks in the S&P 500 gained 21 percent. Cupertino, California-based Apple, which surpassed $600 a share on March 15 for the first time, announced today a quarterly dividend of $2.65 a share for the period beginning July 1.

Citigroup Inc. sold $64.5 million in reverse convertibles tied to Apple on Jan. 25, 2011, Bloomberg data show.

HSBC has increased U.S. structured note sales by 90 percent to $1 billion in the first three months of this year, compared with the same period in 2011, according to Bloomberg data. Bank of America has underwritten about 43 percent of those sales. Overall U.S. issuance of structured notes has fallen 47 percent this year.

Structured notes are securities created by banks, which package debt with derivatives to offer customized bets to investors while earning fees and raising money. Derivatives are contracts whose value is derived from stocks, bonds, currencies and commodities.

walküre's picture

dead end for the central banks and interest rate increases

rate increases? not going to happen anytime soon.

GetZeeGold's picture



Yeah.....clearly not paying attention......ZIRP is set in stone.


SDRII's picture

Bank of America trading lower; weakness being attributed to rumors of a secondary offering reports CNBC Mon, 02/06/2012 - 18:01 | 2132058 SDRII

The only Q on BAC is when the offering comes? The rally got kicked off with the options buy and it has been a steady glide up. Stress test Mar 15 with FOMC the day prior

oogs66's picture

No secondary offering - just a sweet deal for uncle warren.

GovtMediaLiars's picture

Yep. That deal was bullshit and show. Though I caught a lucky break and was holding BAC call options the morning they announced that. That was pretty sweet I have to admit. 
Thanks Warren, you azz.

RUT index did nicely again today and it and the semiconductor SOX look set for outperformance. Though SOX now sitting right at resistance.
Assuming, assuming overall strength continues. Just how big of an assumption is that? I don't know.


today's index chart updates

ACP's picture

With the Fed & HFTs working together, there doesn't need to be ANY volume AT ALL to make prices go up.

redpill's picture

I'm sure Bloomberg will have a full line-up of hedge fund representatives coming on to try to convince themselves and others that any and all news is good for AAPL.

The only thing worse than finding a worm in your Apple is finding half a worm.  Enjoy that dividend, muppets.

adr's picture

Didn't you see the CNN BOLD FACED HEADLINE


Because only Apple can make something cool now.

Lux Fiat's picture

Yes, the AAPL love fest on Bloombarf this morning was sickening.  Gotta love the analyst who managed to say with a completely straight face that the dividend and buy back would drive the price much higher because now dividend and value investors would also find the stock attractive and join their growth stock brethren.  Was that a bell I heard ringing in the background?

Mr Lennon Hendrix's picture

Volume?  We don't need no stinkin' volume!

Stoploss's picture

Somebody bought a chunk o protection today at 14:28

Alex Kintner's picture

Time to get in with both hands and feet. This sucker is going to the Moon. We're all gonna be rich!! A cab driver told me so.

ACP's picture

Then I bet your cab driver is rich. This market is 100% rigged for going up and only up.

The ramping will be neverending after 2 crashes in a row. Instead of printing more, they'll be allowed to lever-up what they have. $16 bil in MBS bought every month will be blown up to $100 bil a month or more, or $200 bil, which is what is now needed to keep this market up.

adr's picture

Like others have said, Apple paying a dividend is just to pass off the bag to the Muppet band leaders. Allowing mutual funds to load up giving the major hedge funds their out.

Retail investors won't buy, they'll force you to buy. The Apple hopium run will last a bit longer and Apple may still hit new highs for a few more weeks but the company is over. When a CEO says, "We've got lots of products in the pipeline." That means they have nothing. iPhone 5, iPad 4, iTV is it. There is nothing else because there hasn't been anything else for the last 12 years. Apple isn't an innovator. They are nothing but a marketing company selling a shiny box plopped around the work of other corporations.

OOOOOOHHHH a tiny little dividend. With $10k a person can buy 15 shares of Apple and can maybe make $200 off the dividend for the whole year, WOW WHERE DO I SIGN UP!!! If Apple shares drop to $550 you'll be out $1800 on your investment.

What a fucking joke.


Terpsftw's picture

I wish I could develop nothing for 12 years and, just as an example, sell 37 million nothings to people who already have a device that serves the same purpose as said nothing, in 3 months time.   And then 1 year later, sell 50 million of a same nothing with a minor upgrade in it, in a 3 month time period.

I'm completely on board that Apple needs to drop soon and correct, but let's not pretend that this is a poor company with nothing in the pipeline.  I see people every day who can't even afford basic necessities on their own, somehow using an iphone.  That same fad is just going to spread worldwide.  I'm bummed I missed a lot of the run too, but I'm not going to act like the iphone isn't growing at a much faster pace than other smartphones in America.  10% in may '11 to 19% in feb '12  vs droid 15% in may '11 to 20% in feb '12.  With the anticipated iphone5 in Q4 2012, I can't imagine Iphones not taking over the lead.  

Sure maybe in 5 years from now, people can say they were right that Apple was going to quiet down at some point, but it's silly to just ignore the run up because it doesn't support your point.  

That is the joke.

AladdinSaneGirl's picture

Love the BULLION BY POST ad across the top of the page! Nice touch.

Sudden Debt's picture

This is what will happen to apple in the not so far future:

I watched it 3 times....

And how does the average apple investor look like?
Starting 7.20...

nestle's picture

Low volume = growth in pussyness among traders!!

Big daddy's best pal, uncle Buffett said when ppl are in fear, ALL IN!!!!

BLOTTO's picture

3 APPL stocks < 1oz Gold Coin

Widowmaker's picture

I'm your Huckleberry.

Next stop, AAPL/GOLD parity.   1 AAPL for 28.35g of stardust.

One generates recurring utility for millions or billions, sometimes in multiples (and now shits silver), the other sits in a safe.  One an inflation-hedging-machine, sometimes in multiples, breaking every record in recorded history, the other -- sits in a safe.

The fanboys in each fellowship are damn near the same eggs - emotional.

Not a bad trade for the rest.

ZenOps's picture

Just a guess:

Stock buyback sometime between now and 2013.  Sounds like once people start reading a little deeper they are going to realize that its possible that once the last of this bull is over - it will turn south, probably in dramatic fashion.

Why would Billionaires want a dividend?  Its just more taxable income.  I think they are going to start bailing fast once the momentum shifts and the retail hands have had their fill.  5% moves to downside possible?

Its like a gold mine, why would you want the dollar value of the gold, when you can just have the gold itself?  Billionaires do not think like the rest of us - and they are going to bail AAPL soon.

mt paul's picture


like apples

luna_man's picture



As usual, nothing to add or subtract...MY MAIN MAN, covers all the bases!

As far as I'm concerned...worth your weight in GOLD!...HOW MUCH DO YOU WEIGH?

Vince Clortho's picture

If Apple actually ponies up and buys stock back at these prices then they are getting some guarantees from some of the big boys that the party will keep going for awhile.  Collusion.

Otherwise, Buyback at these prices is a death wish.

I am a Man I am Forty's picture

apple's trading volume was huge and nearly double the average, your headline is misleading, it sounds like you are talking about apple's trading volume

Atomizer's picture



Apples sales forecast will not be pretty once the actual numbers are released publically. Dividends are offered as table scraps to avoid a major stock sell off. Nothing misleading about headline, raising your head out of the sand will offer light.

calgal's picture

I smell muppet blood in the water..........(theme song to Jaws in the background)

Caviar Emptor's picture

The Dow Jones Muppet Index today rose to record highs.

What's good for Apple is godd for the country! Well, China at least....

devo's picture

The overheating issue is going to result in disappointing numbers come April. Ouch for those buying here. I think $480 is fair value, and it will drop to there (or lower) with a miss. This dividend is a bad omen. The idea that it will attract a new class of investors...I mean, maybe to some degree, but it's not exactly a good enough yield to justify the risk/beta of this stock, so are dividend investors really going to be interested? Only if they get the current growth on their principle, which will be tough to maintain. Such small margin for error here. Buyer beware. Good buy in the mid 400s right now, though. I had it at $330 last year and unfortunately sold early (though after a reasonable gain).

nestle's picture

just saw a rumor that the new iPad sales are down 75% compare to iPad2 initial launch

WarrenB's picture

TRIPLE. 3X. Nice try..

You AAPL bashers amaze me..the stock trades at a 14 P/E EX Cash and is growing 80% YoY, Amazon 50+ and flat growth. AAPL is just catching up to where it should have been valued.

chump666's picture

Ipad 3 is like Ipad 2 right?

Operational costs will blow out in China. Cue inflation sucking into cash.  The stock is a bubble as is the Nasdaq at this point in time, in fact the whole market is, hold long on APPL?  No, this stock is going to leak once the market turns neg.

The market is running on meltup hype by Wall Street banks and Apple.  That is frightening.

nachtliche's picture

I hate to say apple has been much shinier than gold for many years now, and now you get a dividend. 

chump666's picture

Apple/Nasdaq braindead bulls should be sh*tting their panties, China bellweathers are talking major slow down re: BHP

0202 GMT [Dow Jones] The AUD/USD falls below 1.0600 on news that BHP Billiton (BHP.AU) sees iron ore demand from China "flattening." Traders say the headlines had an immediate impact on the currency, pushing it down to an intraday low of 1.0583 from around 1.0620 before the news.

The long overdue correction is about to hit. 

Outlaw Of The Wasteland's picture

9.8X 2013 earnings with a dividend and buyback  


STILL the cheapest stock on the board

Trader47's picture

600 for an apple, you must be out of your mind,, I buy 10 for 2 quid,have I missed something?