Friday, January 12th, 2024

Click here to unsubscribe and miss our next update.

SPONSORED 🔽

Hello Stock Traders,

In a seismic tremor that sent shockwaves through the tech world, Microsoft (NASDAQ: MSFT) briefly dethroned Apple (NASDAQ: AAPL) as the world’s most valuable company, briefly boasting a market cap of $2.888 trillion compared to Apple’s $2.887 trillion. While the shift was fleeting, reclaiming its crown before the closing bell, it suggests a potential seismic shift in the long-term tech landscape.

Since the year’s dawn, it became evident that Microsoft’s rise wasn’t an “if,” but a “when.” Now, the burning question is: can Microsoft hold onto the lead, and for how long?

Let’s delve deeper than a data mine, using InvestingPro as our shovel, to understand the forces at play.

Macroeconomic Winds Favor Microsoft:

The primary factor driving the shift is the shifting global macroeconomic climate, reshaping the tech landscape in 2024. Apple, the reigning market king since 2011 (with a brief dethronement by Aramco in 2022’s oil boom), faces a more challenging terrain than its Redmond rival.

For years, tech companies rode the wave of China’s economic rocket, fueled by consumer and production growth. However, this once-reliable engine sputters, with China’s anticipated GDP deceleration and economic transformation throwing sand in the gears.

This double whammy of rising production costs and dampened demand bites into Apple’s margins, given its heavy exposure to the Chinese market – its primary iPhone sales engine. Despite a 48% stock surge in 2023, the iPhone 15’s disappointing Chinese sales paint a stark picture.

Adding fuel to the fire are rising geopolitical tensions between the US and China, a specter that haunts investors who must now factor in the possibility (albeit not yet materialized) of China restricting iPhone purchases or disrupting the supply chain.

Financial giants like Barclays, Piper Sandler, and recently Redburn-Atlantic, have downgraded Apple’s stock, citing growth slowdown, Chinese market concerns, and the potential loss of an $18 billion Google contract due to an ongoing antitrust lawsuit.

Microsoft, on the other hand, weathers these storms with less China exposure and a more diverse revenue stream. Its software licensing model ensures recurring revenue from loyal customers, and its relentless AI focus allows it to seamlessly integrate AI advancements into existing products.

As analysts predict global growth to be driven by robust consumer markets like India, Mexico, and parts of Africa, Microsoft, with its AI prowess and accessible products, appears better positioned to capitalize on this shift.

Microsoft’s AI Advantage vs. Apple’s AR Gamble:

Microsoft’s 2023 stellar performance, a 57% stock surge, can be partly attributed to its strategic partnership with OpenAI, the brains behind ChatGPT. This alliance empowers Microsoft to seamlessly integrate cutting-edge AI solutions across its software spectrum, a far cry from Apple’s subpar AI offering.

Apple’s 2024 strategic move is the Vision Pro, an augmented reality headset priced at a hefty $3,500, set to hit the market in February. While the VR market’s CAGR looks promising, and Apple might gain some market share, it’s unlikely to plug the hole left by the softening Chinese iPhone market.

Looking ahead, the iPhone maker needs to sprint in the AI race if it wants to avoid falling significantly behind the competition.

In conclusion, Microsoft’s brief reign as the world’s most valuable company serves as a stark reminder that the tech landscape is constantly shifting. While the crown might have been briefly passed, the battle for long-term dominance is far from over. With macroeconomic winds favoring Microsoft and its AI advantage, Apple needs to innovate at breakneck speed to reclaim its lost crown. The tech world watches with bated breath, eager to see who will emerge victorious in this titanic tussle.

–James

Up next: The January crossroads: The S&P 500 chart stands tall against bearish whispers, but internal conflicts and seasonal headwinds demand a cautious, multi-pronged approach.

SPONSORED 🔽

The stock market, after a rollercoaster start to the year, finds itself teetering on the edge of a crucial decision. While the S&P 500 has clawed its way back to near all-time highs, whispers of a potential “January defect” – a historical bearish period – are starting to swirl. With conflicting signals flashing everywhere, let’s dissect the landscape and chart a course through this market maze.

The Bull’s Argument: A Chart in Ascendance

The most compelling bullish case rests on the S&P 500’s chart itself. After weathering the January storm, it remains stubbornly in an uptrend, refusing to relinquish its upward momentum. This unwavering chart, like a mountain standing firm against the wind, offers solace to those who believe the bull market still has legs to stand on.

Internal Squabbles: Mixed Messages from Market Gauges

But beneath the surface, a cacophony of conflicting signals plays out. Indicators like McMillan Volatility Bands and equity-put-call ratios flash sell signals, hinting at underlying anxieties. Market breadth, a measure of participation, lags behind the S&P 500’s heady climb, a potential Achilles’ heel. These internal contradictions paint a picture of a market divided, unsure of its next step.

A Glimmer of Optimism: The Power of Positivity

However, not all is lost in the bearish whispers. The NYSE New Highs vs. New Lows paints a more optimistic picture. Despite an increase in new lows, the daily tally of new highs continues to reign supreme, indicating a persistent undercurrent of positive momentum. Even the realm of implied volatility, typically skittish, maintains a bullish composure, with VIX staying subdued throughout the recent correction.

The January Crossroads: A Calculated Gamble

Now we arrive at the crux of the matter: the “January defect.” This historical tendency for a mid-January dip, particularly in tech stocks, presents a strategic conundrum. While shorting the Nasdaq-100 during this period has yielded both spectacular gains and painful losses, the potential for profit (or protection) can’t be ignored. This is where calculated risk management and a nuanced understanding of entry points become crucial.

Navigating the Storm: A Cautious Approach

Our stance remains cautiously bullish, anchored in the chart’s unwavering uptrend. However, we acknowledge the internal discord and seasonal headwinds. To survive this complex terrain, we advocate for a multi-pronged approach:

• Maintain a “core” bullish position: The chart’s power commands respect.
• Trade strategically around confirmed signals: Identify and capitalize on short-term opportunities emerging from indicators like the January defect.
• Manage risk judiciously: Employ options to limit potential losses, especially when venturing into uncertain seasonal trades.

In conclusion, the market stands at a pivotal crossroads. While the January defect looms, the S&P 500’s chart stubbornly defies bearish whispers. By acknowledging the market’s internal conflicts, embracing strategic opportunism, and prioritizing risk management, we can navigate this complex landscape and emerge victorious, no matter which path the market chooses.

Disclaimer:

Trading foreign exchange, stocks, options, or futures on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade, you should carefully consider your objectives, financial situation, needs and level of experience.

This newsletter provides general information that does not take into account your objectives, financial situation or needs. The content of this newsletter or our website must not be construed as personal advice. COE Media is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation.

The possibility exists that you could sustain a loss in excess of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. You should seek advice from an independent financial advisor.

Any past performance presented is not necessarily indicative of future success.

Always do your own research and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

Advertising Disclosure: This email contains paid advertisements and we have been paid in some fashion to send this advertisment to our readers.

If you do not wish to receive this email, then we apologize for the inconvenience. You can immediately discontinue receiving this email by clicking on the unsubscribe link and you will no longer receive this email.  If you have any questions, please send an email with your questions to [email protected]

We strongly urge you to read our full disclaimer here.

COE MEDIA.    1126 S Federal Hwy
Unit #827    Fort Lauderdale, FL 33316 

Unsubscribe 

Privacy Policy